As Filed with the Securities and Exchange
Commission on February 27, 1995.
Registration No. 811-5473
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 8 X
OPPENHEIMER MULTI-SECTOR INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center
Suite 3400
New York, New York 10048-0203
(Address of Principal Executive Offices)
212-323-0200
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
(Name and Address of Agent for Service)
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FORM N-2
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Cross Reference Sheet
Part A of
Form N-2
Item No. Prospectus Heading
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1 *
2 *
3 *
4 *
5 *
6 *
7 *
8 General Description of the Registrant
9 Management
10 Capital Stock, Long-Term Debt, and Other Securities
11 *
12 *
13 See Item 15 of the Statement of Additional Information
Part B of
Form N-2
Item No. Heading In Statement of Additional Information
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14 Cover Page
15 Table of Contents
16 *
17 See Item 8 of the Prospectus
18 Management
19 Control Persons and Principal Holders of Securities
20 See Item 9 of the Prospectus
21 Brokerage Allocation and Other Practices
22 See Item 10 of the Prospectus
23 Financial Statements
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* Not applicable or negative answer.
<PAGE>
OPPENHEIMER MULTI-SECTOR INCOME TRUST
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Outside Front Cover.
Inapplicable.
Item 2. Inside Front and Outside Back Cover Page.
Inapplicable.
Item 3. Fee Table and Synopsis
Inapplicable.
Item 4. Financial Highlights.
Inapplicable.
Item 5. Plan of Distribution.
Inapplicable.
Item 6. Selling Shareholders.
Inapplicable.
Item 7. Use of Proceeds.
Inapplicable.
Item 8. General Information and History.
1. Oppenheimer Multi-Sector Income Trust (the "Fund" or
"Registrant") is a closed-end diversified management investment company
organized as a Massachusetts business trust on February 22, 1988.
2, 3, and 4. The Fund's primary investment objective is high
current income consistent with preservation of capital. Its secondary
objective is capital appreciation. In seeking those objectives, the Fund
will allocate its assets among seven sectors of the fixed-income
securities market to take advantage of opportunities anticipated by
Oppenheimer Management Corporation, the Fund's investment adviser (the
"Adviser"), to arise in particular sectors in various economic
environments. The Adviser's opinion as to such opportunities will be
based on various factors which may affect the levels of income which can
be obtained from the different sectors, such as (i) the effect of interest
rate changes, on a relative and absolute basis, on yields of securities
in the particular sectors, (ii) the effect of changes in tax laws and
other legislation affecting securities in the various sectors, (iii)
changes in the relative values of foreign currencies, and (iv) perceived
strengths of the abilities of issuers in the various sectors to repay
their obligations. The sectors in which the Fund invests are not divided
by industry but instead differ by type of security and issuer and includes
U.S. Government, Corporate, International, Asset-Backed (including
Mortgage-Backed), Municipal, Convertible and Money Market sectors. The
Adviser believes that investing the Fund's assets in a portfolio comprised
of three or more sectors, as opposed to limiting investments to only one
such sector, will enhance the Fund's ability to achieve high current
income consistent with preservation of capital or seek capital
appreciation. The range of yields of the securities in each sector will
differ from securities in the others both on an absolute and a relative
basis. It is not the intention of the Fund to always allocate its assets
to the sector with the highest range of yields as this may not be
consistent with preservation of capital. The Adviser will, however,
monitor changes in relative yields of securities in the various sectors
to formulate its decisions on which sectors present attractive investment
opportunities at a particular time.
Historically, the markets for the sectors identified below on
pages 5 and 6 have tended to behave somewhat independently and have at
times moved in opposite directions. For example, U.S. Government
Securities (defined below) have generally been affected negatively by
concerns about inflation that might result from increased economic
activity. Corporate debt securities and convertible securities, on the
other hand, have generally benefited from increased economic activity due
to the resulting improvement in the credit quality of corporate issuers
which, in turn, has tended to cause a rise in the prices of common stock
underlying convertible securities. The converse has generally been true
during periods of economic decline. Similarly, U.S. Government Securities
may be negatively affected by a decline in the value of the dollar against
foreign currencies, while the non-dollar denominated securities of foreign
issuers held by U.S. investors have generally benefited from such decline.
Investments in short-term money market securities tend to decline less in
value than long-term debt securities in periods of rising interest rates
but do not rise as much in periods of declining rates. At times the
difference between yields on municipal securities and taxable securities
does not fully reflect the tax advantage of municipal securities. At such
times investments in municipal securities tend to fare better in value
than taxable investments because the yield differential generally may be
expected to increase again to reflect the tax advantage.
The Adviser believes that when financial markets exhibit this
lack of correlation, an active allocation of investments among these seven
sectors may permit greater preservation of capital over the long term than
would be obtained by investing permanently in any one sector. To the
extent that active allocation of investments among market sectors by the
Adviser is successful in preserving or increasing capital, the Fund's
capacity to meet its primary objective of high current income should be
enhanced over the longer term. The Adviser also will utilize certain
other investment techniques, including options and futures, intended to
enhance income and reduce market risk.
The Fund may invest in securities in the Corporate Sector which
are in the lowest rating category of each of Standard & Poor's Corporation
("Standard & Poor's") or Moody's Investors Service, Inc. ("Moody's"), or
which are unrated. The description and characteristics of the lowest
rating category are discussed in the description of the Corporate Sector.
In all other sectors, the Fund will not invest in securities rated lower
than those considered investment grade, i.e. "Baa" by Moody's or "BBB" by
Standard & Poor's. See "Investment Sectors in Which the Fund Invests" and
Appendix B (Securities Ratings) to the Prospectus. Unrated securities
will be of comparable quality to those that are rated, in the opinion of
the Adviser. The seven sectors of the fixed-income securities market in
which the Fund may invest are:
- The U.S. Government Sector, consisting of debt obligations of
the U.S. Government and its agencies and instrumentalities
("U.S. Government Securities");
- The Corporate Sector, consisting of non-convertible debt
obligations or preferred stock of U.S. corporate issuers and
participation interests in senior, fully-secured loans made
primarily to U.S. companies;
- The International Sector, consisting of debt obligations (which
may be denominated in foreign currencies) of foreign governments
and their agencies and instrumentalities, certain supranational
entities and foreign and U.S. companies;
- The Asset-Backed Sector, consisting of undivided fractional
interests in pools of consumer loans and participation interests
in pools of residential mortgage loans guaranteed by agencies
or instrumentalities of the U.S. Government;
- The Municipal Sector, consisting of debt obligations of states,
territories or possessions of the United States and the District
of Columbia or their political subdivisions, agencies,
instrumentalities or authorities;
- The Convertible Sector, consisting of debt obligations and
preferred stock of U.S. corporations which are convertible into
common stock; and
- The Money Market Sector, consisting of U.S. dollar-denominated
debt obligations having a maturity of 397 days or less and
issued by the U.S. Government or its agencies, certain domestic
banks or corporations; or certain foreign governments, agencies
or banks; and repurchase agreements.
Current income, preservation of capital and, secondarily,
possible capital appreciation will be considerations in the allocation of
assets among the seven investment sectors described above. The Adviser
anticipates that at all times Fund assets will be spread among three or
more sectors. Securities in the first six sectors above have maturities
in excess of 397 days. All securities denominated in foreign currencies
will be considered as part of the International Sector, regardless of
maturity. The maximum assets that may be allocated at any one time to
specific sectors are: U.S. Government - 90%, Corporate and Money Market -
50%, all others - 25%. The Fund may also invest in options and futures
related to securities in each of the sectors.
INVESTMENT SECTORS IN WHICH THE FUND INVESTS
The Fund's assets allocated to each of the sectors will be
managed in accordance with the investment policies described above.
The U.S. Government Sector
Assets in this sector will be invested in U.S. Government
Securities, which are obligations issued by or guaranteed by the United
States government or its agencies or instrumentalities. Certain of these
obligations, including U.S. Treasury notes and bonds, and Federal Housing
Administration debentures, are supported by the full faith and credit of
the United States. Certain other U.S. Government Securities, issued or
guaranteed by Federal agencies or government-sponsored enterprises, are
not supported by the full faith and credit of the United States. These
latter securities include obligations supported by the right of the issuer
to borrow from the U.S. Treasury, such as obligations of Federal Home Loan
Banks, and obligations supported by the credit of the instrumentality,
such as Federal National Mortgage Association bonds. The Adviser will
adjust the average maturity of the investments held in this sector from
time to time, depending on its assessment of relative yields of securities
of different maturities and its expectations of future changes in interest
rates. U.S. Government Securities are considered among the most
creditworthy of fixed-income investments. Because of this, the yields
available from U.S. Government Securities are generally lower than the
yields available from corporate debt securities. Nevertheless, the values
of U.S. Government Securities (like those of fixed-income securities
generally) will change as interest rates fluctuate. See Appendix A hereto
for a description of obligations issued by certain U.S. Government
agencies or instrumentalities.
Zero Coupon Treasury Securities. The Fund may invest in "zero
coupon" Treasury securities which are (a) U.S. Treasury notes and bonds
which have been stripped of their unmatured interest coupons and receipts
or (b) certificates representing interests in such stripped debt
obligations and coupons. A zero coupon security pays no interest to its
holder during its life. Accordingly, such securities usually trade at a
deep discount from their face or par value and will be subject to greater
fluctuations of market value in response to changing interest rates than
debt obligations of comparable maturities which make current distribution
of interest. Current Federal tax law requires that a holder of a zero
coupon security accrue a portion of the discount at which the security was
purchased as income each year even though the holder receives no interest
payment in cash on the security during the year. The Fund will not invest
more than 10% of its assets at the time of purchase in zero coupon
Treasury securities.
The Corporate Sector
Assets allocated to this sector will be invested in secured or
unsecured non-convertible preferred stock and corporate debt obligations,
such as bonds, debentures and notes. The Fund may also acquire
participation interests, as described below.
Ratings. Certain corporate fixed income securities in which the
Fund may invest may be unrated or in the lower rating categories of
recognized rating agencies, i.e., ratings of "Baa" or lower by Moody's or
"BBB" or lower by Standard & Poor's. Lower-rated securities will involve
greater volatility of price and risk of principal and income (including
the possibility of default or bankruptcy of the issuer of such securities)
than securities in the higher rating categories. Although the Fund
retains the right to invest in securities in the lowest rating category
(those rated "C" by Moody's or "C" and "D" by Standard & Poor's), it will
not invest in more than 5% of its assets at the time of purchase in such
securities and will do so only if, in the Adviser's opinion, the financial
condition of the issuer or protection afforded to the particular
securities is stronger than otherwise be suggested by such ratings. No
assurance can be given that the Adviser's opinion as to these securities
will be accurate. Therefore, these securities should nevertheless be
consider highly speculative. Those rated "C" by Moody's generally lack
characteristics of desirable investment, are considered highly speculative
and may be in default. Securities rated "C" by Standard & Poor's are
regarded as presenting the highest degree of speculation with respect to
the issuers capacity to pay interest and repay principal in accordance
with the terms of the obligation. Those rated "D" are in default or are
issued by companies in bankruptcy. Such securities pay no current
interest but may present an appreciation opportunity if, in the opinion
of the Adviser, their current price does not reflect the reasonable
possibility that they may resume payment of interest or be exchanged as
a part of a corporate reorganization for securities that will pay
interest.
Participation Interests. The Fund may acquire participation
interests in loans that are made to U.S. or foreign companies (the
"borrower"). They may be interests in, or assignments of, the loan and
are acquired from banks or brokers that have made the loan or are members
of the lending syndicate. No more than 5% of the Fund's net assets can
be invested in participation interests of the same issuer. The Manager
has set certain creditworthiness standards for issuers of loan
participations, and monitors their creditworthiness. The value of loan
participation interests depends primarily upon the creditworthiness of the
borrower, and its ability to pay interest and principal. Borrowers may
have difficulty making payments. If the borrower fails to make scheduled
principal or interest payments, the Fund may experience a decline in net
asset value of its shares. Some borrowers may have senior securities
rated as low as "C" by Moody's or "D" by Standard & Poor's, but may be
deemed acceptable credit risks. Participation interests are subject to
the Fund's limitations on investments in illiquid securities.
The International Sector
The assets allocated to this sector will be invested in debt
obligations which may either be denominated in U.S. dollars or in non-U.S.
currencies, issued by foreign corporations, certain supranational entities
described below, and foreign governments (including political subdivisions
having taxing authority) or their agencies or instrumentalities, and debt
obligations issued by U.S. corporations denominated in non-U.S.
currencies. At the time of purchase, all securities in this sector will
be either securities rated "A" or better by Moody's or Standard & Poor's
or unrated securities which are of comparable quality in the opinion of
the Adviser. The Fund may invest in any country where the Adviser
believes there is a potential to achieve the Fund's investment objectives.
The percentage of the Fund's assets that will be allocated to
this sector will vary on the relative yields of foreign and U.S.
securities, the economies of foreign countries, the condition of such
countries' financial markets, the interest rate climate of such countries
and the relationship of such countries' currencies to the U.S. dollar.
These factors are judged on the basis of fundamental economic criteria
(e.g., relative inflation levels and trends, growth rate forecasts,
balance of payments status, and economic policies) as well as technical
and political data. The Fund's portfolio of foreign securities may
include those of a number of foreign countries or, depending upon market
conditions, those of a single country.
The obligations of foreign governmental entities, including
supranational entities, have various kinds of government support, and may
or may not be supported by the full faith and credit of a foreign
government. Supranational entities include international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and
related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and
Steel Community, the Asian Development Bank and the Inter-American
Development Bank. The governmental members, or "stockholders," usually
make initial capital contributions to the supranational entity and in many
cases are committed to make additional capital contributions if the
supranational entity is unable to repay its borrowings. Each
supranational entity's lending activities are limited to a percentage of
its total capital (including "callable capital" contributed by members at
the entity's call), reserves and net income. There can be no assurance
that foreign governments will be willing or able to honor their
commitments.
Investing in foreign securities involves considerations and
possible risks not typically associated with investing in securities in
the U.S. The values of foreign securities investments will be affected
by changes in currency rates or exchange control regulations or currency
blockage, application of foreign tax laws, including withholding taxes,
changes in governmental administration or economic or monetary policy (in
the U.S. or abroad) or changed circumstances in dealings between nations.
Costs will be incurred in connection with conversions between various
currencies. Foreign brokerage commissions are generally higher than
commissions in the U.S. and foreign securities markets may be less
liquid, more volatile and less subject to governmental supervision than
in the U.S. Investments in foreign countries could be affected by other
factors not generally thought to be present in the U.S., including
expropriation or nationalization, confiscatory taxation, lack of uniform
accounting and auditing standards, and potential difficulties in enforcing
contractual obligations, and could be subject to extended settlement
periods. There may be less information publicly available about foreign
issuers than about U.S. issuers.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S.
dollar will result in a change in the U.S. dollar value of the Fund's
assets and the Fund's income available for distribution. In addition,
although a portion of the Fund's investment income may be received or
realized in foreign currencies, the Fund will be required to compute and
distribute its income in U.S. dollars, and absorb the cost of currency
fluctuations. The Fund may engage in foreign currency exchange
transactions for hedging purposes to protect against changes in future
exchange rates.
The values of foreign investments and the investment income
derived from them may also be affected unfavorably by changes in currency
exchange control regulations. Although the Fund will invest only in
securities denominated in foreign currencies that at the time of
investment do not have government-imposed restrictions on conversion into
U.S. dollars, there can be no assurance against subsequent imposition of
currency controls. In addition, the values of foreign fixed-income
investments will fluctuate in response to changes in U.S. and foreign
interest rates.
The Asset-Backed Sector
Asset-Backed Securities. The Fund may invest in securities that
represent undivided fractional interests in pools of consumer loans,
similar in structure to the mortgage-backed securities in which the Fund
may invest described below. Payments of principal and interest are passed
through to holders of asset-backed securities and are typically supported
by some form of credit enhancement, such as a letter of credit, surety
bond, limited guarantee by another entity or having a priority to certain
of the borrower's other obligations. The degree of credit enhancement
varies and generally applies, until exhausted, to only a fraction of the
asset-backed security's par value. If the credit enhancement of any
asset-backed security held by the Fund has been exhausted, and if any
required payments of principal and interest are not made with respect to
the underlying loans, the Fund may then experience losses or delays in
receiving payment and a decrease in the value of the asset-backed
security.
The value of asset-backed securities is affected by changes in the
market's perception of the asset backing the security, the
creditworthiness of the servicing agent for the loan pool, the originator
of the loans, or the financial institution providing any credit
enhancement, and is also affected if any credit enhancement is exhausted.
The risks of investing in asset-backed securities are ultimately dependent
upon payment of the underlying consumer loans by the individuals, and the
Fund would generally have no recourse to the entity that originated the
loans in the event of default by a borrower. The underlying loans are
subject to prepayments that shorten the weighted average life of asset-
backed securities and may lower their return in the same manner as
described below for prepayments of a pool of mortgage loans underlying
mortgage-backed securities.
Mortgage-Backed Securities. The Fund's investments may include
securities which represent participation interests in pools of residential
mortgage loans which are guaranteed by agencies or instrumentalities of
the U.S. Government. Such securities differ from conventional debt
securities which provide for periodic payment of interest in fixed or
determinable amounts (usually semi-annually) with principal payments at
maturity or specified call dates. Mortgage-backed securities provide
monthly payments which are, in effect, a "pass-through" of the monthly
interest and principal payments (including any prepayments) made by the
individual borrowers on the pooled mortgage loans.
The yield on mortgage-backed securities is based on the average
expected life of the underlying pool of mortgage loans, which is computed
on the basis of the maturities of the underlying instruments. The actual
life of any particular pool will be shortened by unscheduled or early
payments of principal and interest. The occurrence of prepayments is
affected by a wide range of economic, demographic and social factors and,
accordingly, it is not possible to predict accurately the average life of
a particular pool. The yield on such pools is usually computed by using
the historical record of prepayments for that pool, or in the case of
newly-issued mortgages, the prepayment history of similar pools. The
actual prepayment experience of a pool of mortgage loans may cause the
yield realized by the Fund to differ from the yield calculated on the
basis of the expected average life of the pool.
Prepayments tend to increase during periods of falling interest
rates, while during periods of rising interest rates prepayments will most
likely decline. When prevailing interest rates rise, the value of a pass-
through security may decrease as do other debt securities, but, when
prevailing interest rates decline, the value of pass-through securities
is not likely to rise on a comparable basis with other debt securities
because of the pre-payment feature of pass-through securities. The Fund's
reinvestment of scheduled principal payments and unscheduled prepayments
it receives may occur at higher or lower rates than the original
investment, thus affecting the yield of the Fund. Monthly interest
payments received by the Fund have a compounding effect which may increase
the yield to shareholders more than debt obligations that pay interest
semi-annually. Because of those factors, mortgage-backed securities may
be less effective than Treasury bonds of similar maturity at maintaining
yields during periods of declining interest rates. Accelerated
prepayments adversely affect yields for pass-through securities purchased
at a premium (i.e., a price in excess of principal amount) and may involve
additional risk of loss of principal because the premium may not have been
fully amortized at the time the obligation is repaid. The opposite is
true for pass-through securities purchased at a discount. The Fund may
purchase mortgage-backed securities at a premium or at a discount.
The Fund will acquire only those mortgage-backed securities
which are issued or guaranteed by U.S. Government agencies or
instrumentalities. Some of those securities are backed by the full faith
and credit of the U.S. Treasury (e.g., direct pass-through certificates
of the Government National Mortgage Association); some are supported by
the right of the issuer to borrow from the U.S. Government (e.g.,
obligations of Federal Home Loan Banks); and some are backed by only the
credit of the issuer itself (e.g., obligations of the Federal National
Mortgage Association). Such guarantees do not extend to the value or
yield of the mortgage-backed securities themselves or to the value of the
Fund's Shares.
The Fund may invest in collateralized mortgage obligations ("CMOs")
that are issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, or that are collateralized by a portfolio of mortgages
or mortgage-related securities guaranteed by such an agency or
instrumentality. Payment of the interest and principal generated by the
pool of mortgages is passed through to the holders as the payments are
received by the issuer of the CMO. CMOs may be issued in a variety of
classes or series ("tranches") that have different maturities. The
principal value of certain CMO tranches may be more volatile than other
types of mortgage-related securities, because of the possibility that the
principal value of the CMO may be prepaid earlier than the maturity of the
CMO as a result of prepayments of the underlying mortgage loans by the
borrowers.
The Fund may invest in "stripped" mortgage-backed securities or CMOs
or other securities issued by agencies or instrumentalities of the U.S.
Government. Stripped mortgage-backed securities usually have two classes.
The classes receive different proportions of the interest and principal
distributions on the pool of mortgage assets that act as collateral for
the security. In certain cases, one class will receive all of the
interest payments (and is known as an "I/O"), while the other class will
receive all of the principal value on maturity (and is known as a "P/O").
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the
underlying mortgages. Principal prepayments increase that sensitivity.
Stripped securities that pay "interest only" are therefore subject to
greater price volatility when interest rates change, and they have the
additional risk that if the underlying mortgages are prepaid, the Fund
will lose the anticipated cash flow from the interest on the prepaid
mortgages. That risk is increased when general interest rates fall, and
in times of rapidly falling interest rates, the Fund might receive back
less than its investment.
The value of "principal only" securities generally increases as
interest rates decline and prepayment rates rise. The price of these
securities is typically more volatile than that of coupon-bearing bonds
of the same maturity.
Stripped securities are generally purchased and sold by institutional
investors through investment banking firms. At present, established
trading markets have not yet developed for these securities. Therefore,
some stripped securities may be deemed "illiquid." If the Fund holds
illiquid stripped securities, the amount it can hold will be subject to
the Fund's investment limitations set forth under "Direct Placements and
Other Illiquid Securities."
GNMA Certificates. Certificates of the Government National
Mortgage Association ("GNMA Certificates") are mortgage-backed securities
which evidence an undivided interest in a pool or pools of mortgages. The
GNMA Certificates that the Fund may purchase are of the "modified pass-
through" type, which entitle the holder to receive timely payment of all
interest and principal payments due on the mortgage pool, net of fees paid
to the "issuer" and GNMA, regardless of whether the mortgagor actually
makes the payment.
The National Housing Act authorizes GNMA to guarantee the timely
payment of principal and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration ("FHA") or
guaranteed by the Veterans Administration ("VA"). The GNMA guarantee is
backed by the full faith and credit of the U.S. Government. GNMA is also
empowered to borrow without limitation from the U.S. Treasury if necessary
to make any payments required under its guarantee.
The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by mortgagors and
mortgage foreclosures will usually result in the return of the greater
part of principal investment long before the maturity of the mortgages in
the pool. Foreclosures impose no risk to principal investment because of
the GNMA guarantee, except to the extent that the Fund has purchased the
certificates at a premium in the secondary market.
FHLMC Securities. The Federal Home Loan Mortgage Corporation
("FHLMC") was created to promote development of a nationwide secondary
market for conventional residential mortgages. FHLMC issues two types of
mortgage pass-through securities ("FHLMC Certificates"): mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC represents a pro
rata share of all interest and principal payments made and owed on the
underlying pool. FHMLC guarantees timely monthly payment of interest on
PCs and the ultimate payment of principal.
GMCs also represent a pro rata interest in a pool of mortgages.
However, these instruments pay interest semi-annually and return principal
once a year in guaranteed minimum payments. The expected average life of
these securities is approximately ten years. The FHLMC guarantee is not
backed by the full faith and credit of the United States.
FNMA Securities. The Federal National Mortgage Association
("FNMA") was established to create a secondary market in mortgages insured
by the FHA. FNMA issues guaranteed mortgage pass-through certificates
("FNMA Certificates"). FNMA Certificates resemble GNMA Certificates in
that each FNMA Certificate represents a pro rata share of all interest and
principal payments made and owed on the underlying pool. FNMA guarantees
timely payment of interest and principal on FNMA Certificates. The FNMA
guarantee is not backed by the full faith and credit of the United States.
The Municipal Sector
The assets of this sector will be invested in obligations issued
by or on behalf of states, territories or possessions of the United States
and the District of Columbia or their political subdivisions, agencies,
instrumentalities or authorities ("Municipal Bonds"). At the time of
purchase, all securities in this sector will be rated within the four
highest grades assigned by Moody's or Standard & Poor's ("Baa" or better
by Moody's or "BBB" or better by Standard & Poor's), or unrated securities
which are of comparable quality in the opinion of the Adviser. Any income
earned on Municipal Bonds which the Fund distributes to shareholders would
be treated as taxable income to such shareholders.
The Fund does not expect to invest in Municipal Bonds for tax-
exempt income to distribute to shareholders, but to take advantage of
yield differentials with other debt securities, which may be reflected in
bond prices, and thus reflect potential for capital appreciation. Because
Municipal Bonds are generally exempt from Federal taxation they normally
yield much less than taxable fixed-income securities. At times, however,
the yield differential narrows from its normal range. This can occur, for
example, when the demand for U.S. Government securities substantially
increases in times of economic stress, when investors seeking safety are
willing to pay more for such securities thereby reducing the yield. It
also can occur when investors perceive a threat to the continuation of the
tax-exempt status of Municipal Bonds through possible Congressional or
State action. When this happens, investors are not willing to pay as much
for Municipal Bonds, thereby reducing prices and increasing their yield
compared to taxable obligations. If such situations occur, investments
in the Municipal Sector may be more attractive than other sectors even
though such investments continue to offer lower yields than taxable
securities because if the yield differential returns to normal ranges, the
value of Municipal Bonds relative to taxable fixed-income securities will
have increased, i.e. depreciated less or appreciated more. Such an
investment would help the Fund achieve its objective of capital
preservation or capital appreciation. It would also help achieve its
objective of high income because the Fund's net asset value per Share
would be higher than it otherwise would have been, thereby permitting it
to earn additional income on those assets.
Municipal Bonds include debt obligations issued to obtain funds
for various public purposes, including the construction of a wide range
of public facilities such as airports, highways, bridges, schools,
hospitals, housing, mass transportation, streets, and water and sewer
works. Other public purposes for which Municipal Bonds may be issued
include the refunding of outstanding obligations, obtaining funds for
general operating expenses and obtaining funds to lend to other public
institutions and facilities.
The two principal classifications of Municipal Bonds are (1)
"general obligation" and (2) "revenue" (or "special tax") bonds. General
obligation bonds are secured by the issuer's pledge of its full faith,
credit and unlimited taxing power for the payment of principal and
interest. Revenue or special tax bonds are payable only from the revenues
derived from a particular facility or class of facilities or project or,
in a few cases, from the proceeds of a special excise or other tax but are
not supported by the issuer's power to levy general taxes. There are
variations in the security of Municipal Bonds, both within a particular
classification and between classifications, depending on numerous factors.
The yields of Municipal Bonds depend on, among other things, general money
market conditions, general conditions of the Municipal Bond market, size
of a particular offering, the maturity of the obligation and rating of the
issue, and are generally lower than those of taxable investments.
The Convertible Sector
Assets allocated to this sector will be invested in securities
(bonds, debentures, corporate notes, preferred stocks and units with
warrants attached) which are convertible into common stock. Common stock
received upon conversion may be retained in the Fund's portfolio to permit
orderly disposition or to establish a holding period to avoid possible
adverse Federal income tax consequences to the Fund or shareholders.
Convertible securities can provide a potential for current
income through interest and dividend payments and at the same time provide
an opportunity for capital appreciation by virtue of their convertibility
into common stock. The rating requirements to which the Fund is subject
when investing in corporate fixed income securities and foreign securities
(see above) also apply to the Fund's investments in domestic and foreign
convertible securities, respectively.
Convertible securities rank senior to common stock in a
corporation's capital structure and, therefore, may entail less risk than
the corporation's common stock. The value of a convertible security is
a function of its "investment value" (its value without considering its
conversion privilege) and its "conversion value" (the security's worth if
it were to be exchanged pursuant to its conversion privilege for the
underlying security at the market value of the underlying security).
To the extent that a convertible security's investment value is
greater than its conversion value, its price will be primarily a
reflection of such investment value and its price will be likely to
increase when interest rates fall and decrease when interest rates rise
as with other fixed-income securities (the credit standing of the issuer
and other factors may also have an effect on the convertible security's
value). If the conversion value exceeds the investment value, the price
of the convertible security will rise above its investment value and, in
addition, will sell at some premium over its conversion value, which
represents the price investors are willing to pay for the privilege of
purchasing a fixed-income security with a possibility of capital
appreciation due to the conversion privilege. At such times the price of
the convertible security will tend to fluctuate directly with the price
of the underlying equity security. Convertible securities may be
purchased by the Fund at varying price levels above their investment
values and/or their conversion values in keeping with the Fund's
objectives.
The Money Market Sector
Assets in this sector will be invested in the following U.S.
dollar-denominated debt obligations maturing in 397 days or less:
(1) U.S. Government Securities: Obligations issued or guaranteed
by the U.S. Government or its agencies or instrumentalities.
(2) Bank Obligations: Certificates of deposit, bankers' acceptances,
loan participation agreements, time deposits, and letters of
credit if they are payable in the United States or London,
England, and are issued or guaranteed by a domestic or foreign
bank having total assets in excess of $1 billion.
(3) Commercial Paper: Obligations rated "A-1," "A-2" or "A-3" by
Standard & Poor's or Prime-1, Prime-2 or Prime-3 by Moody's or
if not rated, issued by a corporation having an existing debt
security rated "A" or better by Standard & Poor's or "A" or
better by Moody's.
(4) Corporate Obligations: Corporate debt obligations (including
master demand notes but not including commercial paper) if they
are issued by domestic corporations and are rated "A" or better
by Standard & Poor's or "A" or better by Moody's or unrated
securities which are of comparable quality in the opinion of the
Adviser.
(5) Other Obligations: Obligations of the type listed in (1) through
(4) above, but not satisfying the standards set forth therein,
if they are (a) subject to repurchase agreements or (b)
guaranteed as to principal and interest by a domestic or foreign
bank having total assets in excess of $1 billion, by a
corporation whose commercial paper may be purchased by the Fund,
or by a foreign government having an existing debt security
rated "AA" or "Aa" or better.
(6) Board-Approved Instruments: Other short-term investments of a
type which the Board determines presents minimal credit risks
and which are of "high quality" as determined by any major
rating service or, in the case of an instrument that is not
rated, of comparable quality as determined by the Board.
Bank time deposits may be non-negotiable until expiration and
may impose penalties for early withdrawal. Master demand notes are
corporate obligations which permit the investment of fluctuating amounts
by the Fund at varying rates of interest pursuant to direct arrangements
between the Fund, as lender, and the borrower. They permit daily changes
in the amounts borrowed. The Fund has the right to increase the amount
under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount, and the borrower may prepay up to
the full amount of the note without penalty. These notes may or may not
be backed by bank letters of credit. Because these notes are direct
lending arrangements between the lender and borrower, it is not generally
contemplated that they will be traded, and there is no secondary market
for them, although they are redeemable (and thus immediately repayable by
the borrower) at principal amount, plus accrued interest, at any time.
The Fund has no limitation on the type of issuer from whom these notes
will be purchased; however, in connection with such purchase and on an
ongoing basis, subject to policies established by the Board of Trustees,
the Adviser will consider the earning power, cash flow and other liquidity
ratios of the issuer, and its ability to pay principal and interest on
demand, including a situation in which all holders of such notes made
demand simultaneously. Investments in bank time deposits and master
demand notes are subject to the investment limitation on securities that
are not readily marketable set forth under "Special Investment Techniques
- -- Direct Placements and Other Illiquid Securities." Because the Fund may
invest in U.S. dollar-denominated securities of foreign banks and foreign
branches of U.S. banks, the Fund may be subject to additional investment
risks which may include future political and economic developments of the
country in which the bank is located, possible imposition of withholding
taxes on interest income payable on the securities, possible seizure or
nationalization of foreign deposits, the possible establishment of
exchange control regulations or the adoption of other governmental
restrictions that might affect the payment of principal and interest on
such securities. Additionally, not all of the U.S. Federal and state
banking laws and regulations applicable to domestic banks relating to
maintenance of reserves, loan limits and promotion of financial soundness
apply to foreign branches of domestic banks, and none of them apply to
foreign banks.
SPECIAL INVESTMENT TECHNIQUES
In conjunction with the investments in the seven sectors
described above, the Fund may use the following special investment
techniques.
Direct Placements and Other Illiquid Securities
The Fund may invest up to 20% of its assets in securities
purchased in direct placements which are subject to statutory or
contractual restrictions and delays on resale (restricted securities).
Such securities may generally be resold only in privately-negotiated
transactions with a limited number of purchasers or in a public offering
registered under the Securities Act of 1933 and are, therefore, unlike
securities which are traded in the open market and can be expected to be
sold immediately if the market demand is adequate. If restricted
securities are substantially comparable to registered securities of the
same issuer which are readily marketable, the Fund may not purchase them
unless they are offered at a discount from the market price of the
registered securities. No restricted securities will be purchased unless
the issuer has agreed to register the securities at its expense within a
specific time period. Adverse conditions in the public securities market
at certain times may preclude a public offering of an issuer's
unregistered securities. There may be undesirable delays in selling
restricted securities at prices representing fair value.
The Fund may invest up to an additional 10% of its assets in
securities which, although not restricted, are not readily marketable.
Such securities may include bank time deposits, master demand notes
described in the Money Market Sector and certain puts and calls which are
traded in the over-the-counter markets.
Repurchase Agreements
Any of the securities permissible for purchase for one of its sectors
may be acquired by the Fund subject to repurchase agreements with
commercial banks with total assets in excess of $1 billion or securities
dealers with a net worth in excess of $50 million. In a repurchase
transaction, at the time the Fund acquires a security, it simultaneously
resells it to the vendor and must deliver that security to the vendor on
a specific future date. The repurchase price exceeds the purchase price
by an amount that reflects an agreed-upon interest rate effective for the
period during which the repurchase agreement is in effect. The majority
of these transactions run from day to day, and delivery pursuant to the
resale typically will occur within one to five days of the purchase. the
Fund will not enter into a repurchase transaction of more than seven days.
Repurchase agreements are considered "loans" under the Investment Company
Act of 1940 (the "1940 Act"), collateralized by the underlying security.
The Fund's repurchase agreements will require that at all times while the
repurchase agreement is in effect, the collateral's value must equal or
exceed the repurchase price to collateralize the loan fully. The Adviser
will monitor the collateral daily and, in the event its value declines
below the repurchase price, will immediately demand additional collateral
be deposited. If such demand is not met within one day, the existing
collateral will be sold. Additionally, the Adviser will consider the
creditworthiness of the vendor. If the vendor fails to pay the agreed-
upon resale price on the delivery date, the Fund's risks in such event may
include any decline in value of the collateral to an amount which is less
than 100% of the repurchase price, any costs of disposing of such
collateral, and loss from any delay in foreclosing on the collateral.
There is no limit on the amount of the Fund's assets that may be subject
to repurchase agreements.
When-Issued and Delayed Delivery Transactions
The Fund may purchase asset-backed securities, municipal bonds
and other debt securities on a "when-issued" basis, and may purchase or
sell such securities on a "delayed delivery" basis. "When-issued" or
"delayed delivery" refers to securities whose terms and indenture are
available and for which a market exists, but which are not available for
immediate delivery. Although the Fund will enter into such transactions
for the purpose of acquiring securities for its portfolio for delivery
pursuant to option contracts it has entered into, the Fund may dispose of
a commitment prior to settlement. The Fund does not intend to make such
purchases for speculative purposes. When such transactions are
negotiated, the price (which is generally expressed in yield terms) is
fixed at the time the commitment is made, but delivery and payment for the
securities take place at a later date. During the period between
commitment by the Fund and settlement (generally between two months and
120 days), no payment is made for the securities purchased, and no
interest accrues to the Fund from the transaction. Such securities are
subject to market fluctuations; the value at delivery may be less than the
purchase price. The Fund will maintain a segregated account with its
custodian, consisting of cash, short-term U.S. Government Securities or
other high-grade debt obligations at least equal to the value of purchase
commitments until payment is made. Such securities may bear interest at
a lower rate than longer term securities. The commitment to purchase a
security for which payment will be made on a future date may be deemed a
separate security and involve a risk of loss if the value of the security
declines prior to the settlement date, which risk is in addition to the
risk of decline of the Fund's other assets.
Hedging
The Fund may use Interest Rate Futures; Bond Index Futures
(together with Interest Rate Futures, "Futures"); Forward Contracts
(defined below); and call and put options on debt securities, Futures,
bond indices and foreign currencies (all of the foregoing are referred to
as "Hedging Instruments"). Hedging Instruments may be used to attempt to
protect against possible declines in the market value of the Fund's
portfolio from downward trends in debt securities markets (generally due
to a rise in interest rates), to protect the Fund's unrealized gains in
the value of its debt securities which have appreciated, to facilitate
selling debt securities for investment reasons, to establish a position
in the debt securities markets as a temporary substitute for purchasing
particular debt securities, or to reduce the risk of adverse currency
fluctuations. The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's activities in the underlying cash
market. Covered calls and puts may also be written on debt securities to
attempt to increase the Fund's income. A call or put may be purchased
only if, after such purchase, the value of all call and put options held
by the Fund would not exceed 5% of the Fund's total assets. The Fund will
not use Futures and options on Futures for speculation. The Hedging
Instruments the Fund may use are described below. As of the date of this
Registration Statement, the Fund does not intend to enter into Futures,
Forward Contracts and options on Futures if after any such purchase, the
sum of margin deposits on Futures and premiums paid on Futures options
would exceed 5% of the value of the Fund's total assets.
Interest Rate Futures and Bond Index Futures. The Fund may buy
and sell Futures. An Interest Rate Future obligates the seller to deliver
and the purchaser to take a specific type of debt security at a specific
future date for a fixed price. That obligation may be satisfied by actual
delivery of the debt security or by entering into an offsetting contract.
A bond index assigns relative values to the bonds included in that index
and is used as a basis for trading long-term Bond Index Futures contracts.
Bond Index Futures reflect the price movements of bonds included in the
index. They differ from Interest Rate Futures in that settlement is made
in cash rather than by delivery; or settlement may be made by entering
into an offsetting contract.
Calls on Securities and Futures. The Fund may write (i.e.,
sell) or purchase call options ("calls") on debt securities that were
traded on U.S. and foreign securities and over-the-counter markets. All
such calls written by the Fund must be "covered" while the call is
outstanding (i.e., the Fund must own the securities subject to the call
or other securities acceptable for applicable escrow requirements). Calls
on Futures must be covered by deliverable securities or by liquid assets
segregated to satisfy the Futures contract. If a call written by the Fund
is exercised, the Fund foregoes any possible profit from an increase in
the market price of the underlying security over the exercise price.
Puts on Securities and Futures. The Fund may purchase put
options ("puts") which relate to debt securities (whether or not it holds
such securities in its portfolio) or Futures. It may also write puts on
debt securities or Futures if such puts are covered by segregated liquid
assets. The Fund will not write puts if, as a result, more than 50% of
the Fund's assets would be required to be segregated liquid assets. In
writing puts, there is the risk that the Fund may be required to buy the
underlying security at a disadvantageous price.
Foreign Currency Options. The Fund may purchase and write puts
and calls on foreign currencies that are traded on a securities or
commodities exchange or quoted by major recognized dealers in such
options, for the purpose of protecting against declines in the dollar
value of foreign securities and against increases in the dollar cost of
foreign securities to be acquired. If a rise is anticipated in the dollar
value of a foreign currency in which securities to be acquired are
denominated, the increased cost of such securities may be partially offset
by purchasing calls or writing puts on that foreign currency. If a
decline in the dollar value of a foreign currency is anticipated, the
decline in value of portfolio securities denominated in that currency may
be partially offset by writing calls or purchasing puts on that foreign
currency. However, in the event of currency rate fluctuations adverse to
the Fund's position, it would either lose the premium it paid and incur
transaction costs, or purchase or sell the foreign currency at a
disadvantageous price.
Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific foreign currency at a
specific future date for a fixed price. The Fund may enter into a Forward
Contract in order to "lock in" the U.S. dollar price of a security
denominated in a foreign currency, or to protect against a possible loss
resulting from an adverse change in the relationship between the U.S.
dollar and a foreign currency. There is a risk that use of Forward
Contracts may reduce the gain that would otherwise result from a change
in the relationship between the U.S. dollar and a foreign currency.
Forward contracts include standardized foreign currency futures contracts
which are traded on exchanges and are subject to procedures and
regulations applicable to other Futures. The Fund may also enter into a
Forward Contract to sell a foreign currency denominated in a currency
other than that in which the underlying security is denominated. This is
done in the expectation that there is a greater correlation between the
foreign currency of the Forward Contract and the foreign currency of the
underlying investment than between the U.S. dollar and the currency of the
underlying investment. This technique is referred to as "cross hedging".
The success of cross hedging is dependent on many factors, including the
ability of the Adviser to correctly identify and monitor the correlation
between foreign currencies and the U.S. dollar. To the extent that the
correlation is not identical, the Fund may experience losses or gains on
both the underlying security and the cross currency hedge.
The Fund will not speculate in foreign currency exchange contracts.
There is no limitation as to the percentage of the Fund's assets that may
be committed to foreign currency exchange contracts. The Fund does not
enter into such Forward Contracts or maintain a net exposure in such
contracts to the extent that the Fund would be obligated to deliver an
amount of foreign currency in excess of the value of the Fund's assets
denominated in that currency or enter into a cross hedge unless it is
denominated in a currency or currencies that the Adviser believes will
have price movements that tend to correlate closely with the currency in
which the investment being hedged is denominated.
There are certain risks in writing calls. If a call written by the
Fund is exercised, the Fund foregoes any profit from any increase in the
market price above the call price of the underlying investment on which
the call was written. In addition, the Fund could experience capital
losses that might cause previously distributed short-term capital gains
to be re-characterized as non-taxable return of capital to shareholders.
In writing puts, there is the risk that the Fund may be required to buy
the underlying security at a disadvantageous price. The principal risks
relating to the use of Futures are: (a) possible imperfect correlation
between the prices of the Futures and the market value of the debt
securities in the Fund's portfolio; (b) possible lack of a liquid
secondary market for closing out a Futures position; (c) the need for
additional skills and techniques beyond those required for normal
portfolio management; and (d) losses on Futures resulting from interest
rate movements not anticipated by the Adviser.
Interest Rate Swaps. In an interest rate swap, the Fund and another
party exchange their right to receive or their obligation to pay interest
on a security. For example, they may swap a right to receive floating
rate payments for fixed rate payments. The Fund enters into swaps only
on securities it owns. The Fund may not enter into swaps with respect to
more than 25% of its total assets. Also, the Fund will segregate liquid
assets (such as cash or U.S. Government securities or other appropriate
high grade debt obligations) to cover any amounts it could owe under swaps
that exceed the amounts it is entitled to receive, and it will adjust that
amount daily, as needed.
Derivative Investments. The Fund can invest in a number of different
kinds of "derivative investments." In general, a "derivative investment"
is a specially designed investment whose performance is linked to the
performance of another investment or security, such as an option, future,
index or currency. In the broadest sense, derivative investments include
exchange-traded options and futures contracts. The risks of investing in
derivative investments include not only the ability of the company issuing
the instrument to pay the amount due on the maturity of the instrument,
but also the risk that the underlying investment or security might not
perform the way the Manager expected it to perform. The performance of
derivative investments may also be influenced by interest rate changes in
the U.S. and abroad. All of this can mean that the Fund will realize less
principal and/or income than expected. Certain derivative investments
held by the Fund may trade in the over-the-counter market and may be
illiquid.
Examples of derivative investments the Fund may invest in include,
among others, "index-linked" notes. These are debt securities of
companies that call for payment on maturity of the note in different terms
than the typical note where the borrower agrees to pay a fixed sum on the
maturity of the note. The payment on maturity of an index-linked note
depends on the performance of one or more market indices, such as the S&P
500 Index. Further examples of derivative investments the Fund may invest
in include "debt exchangeable for common stock" of an issuer or "equity-
linked debt securities" of an issuer. At maturity, the principal amount
of the debt security is exchanged for common stock of the issuer or is
payable in an amount based on the issuer's common stock price at the time
of maturity. In either case there is a risk that the amount payable at
maturity will be less than the principal amount of the debt.
Other examples of derivative investments the Fund may invest in are
currency-indexed securities. These are typically short-term or
intermediate-term debt securities whose maturity values or interest rates
are determined by reference to one or more specified foreign currencies.
Certain currency-indexed securities purchased by the Fund may have a
payout factor tied to a multiple of the movement of the U.S. dollar (or
the foreign currency in which the security is denominated) against the
movement in the U.S. dollar, the foreign currency, another currency, or
an index. Such securities may be subject to increased principal risk and
increased volatility than comparable securities without a payout factor
in excess of one, but the Manager believes the increased yield justifies
the increased risk.
Loans of Portfolio Securities
To attempt to increase its income, the Fund may lend its portfolio
securities if, after any loan, the value of the securities loaned does not
exceed 25% of the total value of its assets. Under applicable regulatory
requirements (which are subject to change), the loan collateral must, on
each business day, be at least equal to the value of the loaned securities
and must consist of cash, bank letters of credit or U.S. Government
Securities. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Fund if the demand meets
the terms of the letter. Such terms and the issuing bank must be
satisfactory to the Fund. The Fund receives an amount equal to the
dividends or interest on loaned securities and also receives one or more
of (a) negotiated loan fees, (b) interest on securities used as
collateral, or (c) interest on short-term debt securities purchased with
such loan collateral; either type of interest may be shared with the
borrower. The Fund may also pay reasonable finder's, custodian and
administrative fees. The terms of the Fund's loans must meet certain
tests under the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code" or the "Code"), and permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter. The Fund will make such loans only to banks and securities
dealers with whom it may enter into repurchase transactions. If the
borrower fails to return this loaned security the Fund's risks include:
(1) any costs in disposing of the collateral; (2) loss from a decline in
value of the collateral to an amount less than 100% of the securities
loaned; (3) being unable to exercise its voting or consent rights with
respect to the security; and (4) any loss arising from the Fund being
unable to timely settle a sale of such securities.
Borrowing
From time to time, the Fund may increase its ownership of
securities by borrowing up to 10% of the value of its net assets from
banks and investing the borrowed funds (on which the Fund will pay
interest), subject to compliance with the 300% asset coverage requirement
of the 1940 Act. Subject to those limits (which are fundamental
policies), the Fund may also borrow to finance repurchases and/or tenders
of its Shares and may also borrow for temporary purposes in an amount not
exceeding 5% of the value of the Fund's total assets. Any investment
gains made with the proceeds obtained from borrowings in excess of
interest paid on the borrowings will cause the net income per share or the
net asset value per share of the Fund's Shares to be greater than would
otherwise be the case. On the other hand, if the investment performance
of the securities purchased fails to cover their cost (including any
interest paid on the money borrowed) to the Fund, then the net income per
share or net asset value per share of the Fund's Shares will be less than
would otherwise have been the case. This speculative factor is known as
"leverage." Although such borrowings would therefore involve additional
risk to the Fund, the Fund will only borrow if such additional risk of
loss of principal is considered by the Adviser to be appropriate in
relation to the Fund's primary investment objective of high current income
consistent with preservation of capital. The Adviser will make this
determination by examining both the market for securities in which the
Fund invests and interest rates in general to ascertain that the climate
is sufficiently stable to warrant borrowing.
Portfolio Turnover
Because the Fund will actively use trading to benefit from
short-term yield disparities among different issues of fixed-income
securities or otherwise to achieve its investment objective and policies,
the Fund may be subject to a greater degree of portfolio turnover than
might be expected from investment companies which invest substantially all
of their assets on a long-term basis. The Fund cannot accurately predict
its portfolio turnover rate, but it is anticipated that its annual
turnover rate generally will not exceed 400% (excluding turnover of
securities having a maturity of one year or less). The Adviser will
monitor the Fund's tax status under the Internal Revenue Code during
periods in which the Fund's annual turnover rate exceeds 100%. Higher
portfolio turnover results in increased Fund expenses, including brokerage
commissions, dealer mark-ups and other transaction costs on the sale of
securities and on the reinvestment in other securities. To the extent
that increased portfolio turnover results in sales of securities held less
than three months, the Fund's ability to qualify as a "regulated
investment company" under the Internal Revenue Code may be affected.
Defensive Strategies
There may be times when, in the Adviser's judgment, conditions
in the securities markets would make pursuing the Fund's primary
investment strategy inconsistent with the best interests of its
shareholders. At such times, the Fund may employ alternative strategies
primarily seeking to reduce fluctuations in the value of the Fund's
assets. In implementing these defensive strategies, the Fund may invest
all or any portion of its assets in nonconvertible high-grade debt
securities, or U.S. government and agency obligations. The Fund may also
hold a portion of its assets in cash or cash equivalents. It is
impossible to predict when, or for how long, alternative strategies will
be utilized.
Effects of Interest Rate Changes
During periods of falling interest rates, the values of
outstanding long term fixed-income securities generally rise. Conversely,
during periods of rising interest rates, the values of such securities
generally decline. The magnitude of these fluctuations will generally be
greater for securities with longer maturities. If the Adviser's
expectation of changes in interest rates or its evaluation of the normal
yield relationships in the fixed-income markets proves to be incorrect,
the Fund's income, net asset value and potential capital gain may be
decreased or its potential capital loss may be increased.
Although changes in the value of the Fund's portfolio securities
subsequent to their acquisition are reflected in the net asset value of
the Fund's Shares, such changes will not affect the income received by the
Fund from such securities. The dividends paid by the Fund will increase
or decrease in relation to the income received by the Fund from its
investments, which will in any case be reduced by the Fund's expenses
before being distributed to the Fund's shareholders.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions,
which together with its investment objectives, are fundamental policies
changeable only with the approval of the holders of a "majority" of the
Fund's outstanding voting securities, defined in the 1940 Act as the
affirmative vote of the lesser of (a) more than 50% of the outstanding
Shares of the Fund, or (b) 67% or more of the Shares present or
represented by proxy at a meeting if more than 50% of the Fund's
outstanding Shares are represented at the meeting in person or by proxy.
The percentage limitations set forth below, as well as those described
elsewhere, apply only at the time of investment and require no action by
the Fund as a result of subsequent changes in the value or size of the
Fund. Under these restrictions, the Fund will not:
1. As to 75% of its total assets, invest in securities of any one
issuer (other than the United States Government, its agencies
or instrumentalities) if after any such investment either (a)
more than 5% of the Fund's total assets would be invested in the
securities of that issuer, or (b) the Fund would then own more
than 10% of the voting securities of that issuer;
2. Concentrate investments to the extent of more than 25% of its
total assets in securities of issuers in the same industry;
provided that this limitation shall not apply with respect to
investments in U.S. Government Securities.
3. Make loans except through (a) the purchase of debt securities
in accordance with its investment objectives and policies; (b)
the lending of portfolio securities as described above; or (c)
the acquisition of securities subject to repurchase agreements;
4. Borrow money, except in conformity with the restrictions stated
above under "Borrowing."
5. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure permitted borrowings or for the escrow
arrangements contemplated in connection with the use of Hedging
Instruments;
6. Participate on a joint or joint and several basis in any
securities trading account;
7. Invest in companies for the purpose of exercising control or
management thereof;
8. Make short sales of securities or maintain a short position,
unless at all times when a short position is open it owns an
equal amount of such securities or by virtue of ownership of
other securities has the right, without payment of any further
consideration, to obtain an equal amount of the securities sold
short ("short sales against the box"); short sales may be made
to defer realization of gain or loss for Federal income tax
purposes;
9. Invest in (a) real estate, except that it may purchase and sell
securities of companies which deal in real estate or interests
therein; (b) commodities or commodity contracts (except that the
Fund may purchase and sell Hedging Instruments whether or not
they are considered to be a commodity or commodity contract);
or (c) interests in oil, gas or other mineral exploration or
development programs;
10. Act as an underwriter of securities, except insofar as the Fund
might be deemed to be an underwriter for purposes of the
Securities Act of 1933 in the resale of any securities held for
its own portfolio; or
11. Purchase securities on margin, except that the Fund may make
margin deposits in connection with any of the Hedging
Instruments it may use.
5. The shares of beneficial interest of the Fund, $.01 par value per
share (the "Shares"), are listed and traded on The New York Stock Exchange
(the "NYSE"). The following table sets forth for the Shares for the
periods indicated: (a) the per Share high sales price on the NYSE, the net
asset value per Share as of the last day of the week immediately preceding
such day and the premium or discount (expressed as a percentage of net
asset value) represented by the difference between such high sales price
and the corresponding net asset value and (b) the per Share low sales
price on the NYSE, the net asset value per Share as of the last day of the
week immediately preceding such day and the premium or discount (expressed
as a percentage of net asset value) represented by the difference between
such low sales price and the corresponding net asset value.
<TABLE>
<CAPTION>
Market Price High;(1) Market Price Low; (1)
NAV and Premium/ NAV and Premium/
Quarter Ended (Discount) That Day (2) (Discount) That Day (2)
<S> <C> <C>
1/31/93 Market: $11.000 Market: $10.000
NAV: $10.43 NAV: $10.36
Premium/(Discount):5.47 Premium/(Discount):-3.66
4/30/93 Market: $11.250 Market: $10.750
NAV: $10.58 NAV: $10.66
Premium/(Discount):6.33 Premium/(Discount):0.84
7/31/93 Market: $11.375 Market: $11.000
NAV: $10.77 NAV: $10.80
Premium/(Discount):5.62 Premium/(Discount):1.85
10/31/93 Market: $11.375 Market: $11.000
NAV: $10.88 NAV: $10.82
Premium/(Discount):4.55 Premium/(Discount):1.66
1/31/94 Market: $11.375 Market: $10.625
NAV: $11.18 NAV: $10.97
Premium/(Discount):1.74 Premium/(Discount):-3.14
4/30/94 Market: $11.375 Market: $10.000
NAV: $11.18 NAV: $10.32
Premium/(Discount):1.74 Premium/(Discount):-3.10
7/31/94 Market: $10.625 Market: $10.000
NAV: $10.40 NAV: $10.42
Premium/(Discount):2.16 Premium/(Discount):-4.03
10/31/94 Market: $10.375 Market: $9.125
NAV: $10.30 NAV: $10.24
Premium/(Discount):0.73 Premium/(Discount):
-10.89
1/31/95 Market: $10.000 Market: $8.875
NAV: $10.06 NAV: $10.09
Premium/(Discount):-0.60 Premium/(Discount):
-12.04
<FN>
_______________
1. As reported by the NYSE.
2. The Fund's computation of net asset value (NAV) is as of the
close of trading on the last day of the week immediately
preceding the day for which the high and low market price is
reported and the premium or discount (expressed as a percentage
of net asset value) is calculated based on the difference between
the high or low market price and the corresponding net asset
value for that day, divided by the net asset value.
</TABLE>
On February 3, 1995, the net asset value per share of the Fund was
$9.77, the closing sales price on the NYSE was $9.75; the discount to net
asset value $0.02 (or 0.2% of market value). Since the Fund's inception
in 1988, the Fund's shares have from time to time traded for an amount
less than the Fund's net asset value.
The Board of Trustees of the Fund has determined that it may be
in the interests of Fund shareholders for the Fund to take action to
attempt to reduce or eliminate a market value discount from net asset
value. To that end, the Fund may, from time to time, either repurchase
Shares in the open market or, subject to conditions imposed from time to
time by the Board, make a tender offer for a portion of the Fund's Shares
at their net asset value per Share. Subject to the Fund's fundamental
policy with respect to borrowings, the Fund may incur debt to finance
repurchases and/or tenders. Interest on any such borrowings will reduce
the Fund's net income. In addition, the acquisition of Shares by the Fund
will decrease the total assets of the Fund and therefore will have the
effect of increasing the Fund's expense ratio. If the Fund must liquidate
portfolio securities to purchase Shares tendered, the Fund may be required
to sell portfolio securities for other than investment purposes and may
realize gains and losses. Gains realized on securities held for less than
three months may affect the Fund's ability to retain its status as a
regulated investment company under the Internal Revenue Code.
In addition to open-market Share purchases and tender offers, the
Board could also seek shareholder approval to convert the Fund to an open-
end investment company if the Fund's Shares trade at a substantial
discount. If the Fund's Shares have traded on the NYSE at an average
discount from net asset value of more than 10%, determined on the basis
of the discount as of the end of the last trading day in each week during
the period of 12 calendar weeks ending October 31 in such year, the
Trustees will consider recommending to shareholders a proposal to convert
the Fund to an open-end company. If during a year in which the Fund's
Shares trade at the average discount stated, and for the period described,
in the preceding sentence the Fund also receives written requests from the
holders of 10% or more of the Fund's outstanding Shares that a proposal
to convert to an open end company be submitted to the Fund's shareholders,
within six months the Trustees will submit a proposal to the Fund's
shareholders, to the extent consistent with the 1940 Act, to amend the
Fund's Declaration of Trust to convert the Fund from a closed-end to an
open-end investment company. If the Fund converted to an open-end
investment company, it would be able continuously to issue and offer its
Shares for sale, and each Share of the Fund could be tendered to the Fund
for redemption at the option of the shareholder, at a redemption price
equal to the current net asset value per Share. To meet such redemption
request, the Fund could be required to liquidate portfolio securities.
It Shares would no longer be listed on the NYSE. The Fund cannot predict
whether any repurchase of Shares made while the Fund is a closed-end
investment company would decrease the discount from net asset value at
which the Shares trade. To the extent that any such repurchase decreased
the discount from net asset value to an amount below 10% during the
measurement period described above, the Fund would not be required to
submit to shareholders a proposal to convert the Fund to an open-end
investment company.
Item 9. Management
1(a). The Fund is governed by a Board of Trustees, which is
responsible under Massachusetts law for protecting the interests of
shareholders. The Trustees meet periodically throughout the year to
oversee the Fund's activities, review its performance, and review the
actions of the Adviser. The Fund is required to hold annual shareholder
meetings for the election of trustees and the ratification of its
independent auditors. The Fund may also hold shareholder meetings from
time to time for other important matters, and shareholders have the right
to call a meeting to remove a Trustee or to take other action described
in the Fund's Declaration of Trust.
1(b). The Adviser, a Colorado corporation with its principal
offices at Two World Trade Center, New York, New York 10048-0203, acts as
investment manager for the Fund under an investment advisory agreement
(the "Advisory Agreement") under which it provides ongoing investment
advice and conducts the investment operations of the Fund, including
purchases and sales of its portfolio securities, under the general
supervision and control of the Trustees of the Fund. The Adviser also
acts as accounting agent for the Fund.
The Adviser has operated as an investment company adviser since
April 30, 1959. It and its affiliates currently manage investment
companies with assets of more than $29 billion as of December 31, 1994,
and having more than 2.4 million shareholder accounts. The Adviser is
owned by Oppenheimer Acquisition Corp., a holding company owned in part
by senior management of the Adviser, and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.
The Adviser provides office space and investment advisory services
for the Fund and pays all compensation of those Trustees and officers of
the Fund who are affiliated persons of the Adviser. Under the Advisory
Agreement, the Fund pays the Adviser an advisory fee computed and paid
weekly at an annual rate of .65 of 1% of the net assets of the Fund at the
end of that week. The Fund also pays the Adviser an annual fee of
$24,000, plus out-of-pocket costs and expenses reasonably incurred, for
performing limited accounting services for the Fund. During the fiscal
years ended October 31, 1992, 1993 and 1994, the Fund paid management fees
to the Adviser of $1,974,433, $1,947,081, and $1,995,015, respectively.
The Fund incurred approximately $38,252 in expenses for the fiscal year
ended October 31, 1994 for services provided by SFSI.
Under the Advisory Agreement, the Fund pays certain of its other
costs not paid by the Adviser, including (a) brokerage and commission
expenses, (b) Federal, state, local and foreign taxes, including issue and
transfer taxes, incurred by or levied on the Fund, (c) interest charges
on borrowings, (d) the organizational and offering expenses of the Fund,
whether or not advanced by the Adviser, (e) fees and expenses of
registering the Shares of the Fund under the appropriate Federal
securities laws and of qualifying Shares of the Fund under applicable
state securities laws, (f) fees and expenses of listing and maintaining
the listings of the Fund's Shares on any national securities exchange, (g)
expenses of printing and distributing reports to shareholders, (h) costs
of shareholder meetings and proxy solicitation, (i) charges and expenses
of the Fund's Administrator, custodian and Registrar, Transfer and
Dividend Disbursing Agent, (j) compensation of the Fund's Trustees who are
not interested persons of the Adviser, (k) legal and auditing expenses,
(l) the cost of certificates representing the Fund's Shares, (m) costs of
stationery and supplies, and (n) insurance premiums. The Adviser has
advanced certain of the Fund's organizational and offering expenses, which
were repaid by the Fund. There is no expense limitation provision.
1(c). The Portfolio Managers of the Fund are Thomas Reedy, David
Rosenberg and Ashwin Vasan, who also serve as Vice Presidents of the Fund
and of the Adviser, and are officers of certain mutual funds managed by
the Adviser ("Oppenheimer Funds"). Messrs. Reedy, Rosenberg and Vasan
have been the persons principally responsible for the day-to-day
management of the Trust's portfolio since June 1993, June 1994 and June
1993, respectively. During the past five years, Mr. Reedy served as a
securities analyst for the Manager, and, prior to joining the Manager, Mr.
Rosenberg served as an officer and portfolio manager for Delaware
Investment Advisors and one of its mutual funds and Mr. Vasan served as
a securities analyst for Citibank, N.A.
1(d). The Administrator for the Fund is Mitchell Hutchins Asset
Management Inc. (the "Administrator"), a Delaware corporation with
principal offices at 1285 Avenue of the Americas, New York, New York 10019
and an affiliate of PaineWebber Incorporated.
Because of the services rendered to the Fund by the Administrator
and the Adviser, the Fund itself requires no employees other than its
officers, none of whom receives compensation from the Fund and all of whom
are employed by the Adviser or the Administrator. In connection with its
responsibilities as Administrator and in consideration of its
administrative fee, subject to the supervision of the Board of Trustees
the Administrator will: (i) prepare all quarterly, semi-annual and annual
reports required to be sent to Fund shareholders, and arrange for the
printing and dissemination of such reports to shareholders; (ii) assemble
and file all reports required to be filed by the Fund with the Securities
and Exchange Commission ("SEC") on Form N-SAR, or such other form as the
SEC may substitute for Form N-SAR; (iii) review the provision of services
by the Fund's independent accountants, including but not limited to the
examination by such accountants of financial statements of the Fund and
the review of the Fund's Federal, state and local tax returns; and make
such reports and recommendations to the Board of Trustees concerning the
performance of the independent accountants as the Board reasonably
requests or as it deems appropriate; (iv) file with the appropriate
authorities all required Federal, state and local tax returns; (v) arrange
for the dissemination to shareholders of the Fund's proxy materials, and
oversee the tabulation of proxies by the Fund's transfer agent; (vi)
negotiate the terms and conditions under which custodian services will be
provided to the Fund and the fees to be paid by the Fund in connection
therewith; (vii) recommend an accounting agent (which may or may not be
the Fund's custodian or its affiliate) to the Board, which agent would be
responsible for computing the Fund's net asset value in accordance with
the Fund's registration statement under the 1940 Act and the Securities
Act of 1933, as amended; (vii) negotiate the terms and conditions under
which such accounting agent would compute the Fund's net asset value, and
the fees to be paid by the Fund in connection therewith; review the
provision of such accounting services to the Fund and make such reports
and recommendations to the Board concerning the provisions of such
services as the Board reasonably requests or the Administrator deems
appropriate; (ix) negotiate the terms and conditions under which the
transfer agency and dividend disbursing services will be provided to the
Fund, and the fees to be paid by the Fund in connection therewith; review
the provision of transfer agency and dividend disbursing services to the
Fund; and make such reports and recommendations to the Board concerning
the performance of the Fund's transfer and dividend disbursing agent as
the Board reasonably requests or the Administrator deems appropriate; (x)
establish the accounting policies of the Fund; reconcile accounting issues
which may arise with respect to the Fund's operations; consult with the
Fund's independent accountants, legal counsel, custodian, accounting agent
and transfer and dividend disbursing agent as necessary in connection
therewith; (xi) determine the amounts available for distribution as
dividends and distributions to shareholders; prepare and arrange for the
printing of dividend notices to the shareholders; and provide the Fund's
transfer and dividend disbursing agent and custodian with such information
as is required for such parties to effect the payment of dividends and
distributions and to implement the Fund's dividend reinvestment plan;
(xii) review the Fund's bills and authorize payments of such bills by the
Fund's custodian; and (xiii) if requested by the Board, designate one of
its employees to serve as an officer of the Fund, and such person shall
not be compensated by the Fund for so serving.
For the services rendered to the Fund and related expenses borne
by the Administrator, the Fund pays the Administrator a fee, calculated
and paid weekly, at the annualized rate of .20% of the Fund's net assets
at the end of that week. During the fiscal years ended October 31, 1992,
1993 and 1994, the Fund paid administration fees to the Administrator of
$608,233, $614,792 and $613,851, respectively.
1(e). The Bank of New York, 48 Wall Street, New York, New York,
acts as the custodian (the "Custodian") for the Fund's assets held in the
United States. The Adviser and its affiliates have banking relationships
with the Custodian. The Adviser has represented to the Fund that its
banking relationships with the Custodian have been and will continue to
be unrelated to and unaffected by the relationship between the Fund and
the Custodian. It will be the practice of the Fund to deal with the
Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Adviser and its affiliates. Rules adopted
under the 1940 Act permit the Fund to maintain its securities and cash in
the custody of certain eligible banks and securities depositories.
Pursuant to those Rules, the Fund's portfolio of securities and cash, when
invested in foreign securities, will be held in foreign banks and
securities depositories approved by the Trustees of the Fund in accordance
with the rules of the Securities and Exchange Commission.
SFSI, a subsidiary of the Adviser, acts as primary transfer agent,
shareholder servicing agent and dividend paying agent for the Fund. Fees
paid to SFSI are based on the number of shareholder accounts and the
number of shareholder transactions, plus out-of-pocket costs and expenses.
United Missouri Trust Company of New York acts as co-transfer agent and
co-registrar with SFSI to provide such services as SFSI may request.
1(f). See 1(b) above.
1(g). Inapplicable.
2. Inapplicable.
3. None as of February 15, 1995.
Item 10.Capital Stock, Long-Term Debt, and Other Securities.
1. The Fund is authorized to issue an unlimited number of Shares
of beneficial interest, $.01 par value. The Fund's Shares have no
preemptive, conversion, exchange or redemption rights. Each Share has
equal voting, dividend, distribution and liquidation rights. All Shares
outstanding are, and, when issued, those offered hereby will be, fully
paid and nonassessable. Shareholders are entitled to one vote per Share.
All voting rights for the election of Trustees are noncumulative, which
means that the holders of more than 50% of the Shares can elect 100% of
the Trustees then nominated for election if they choose to do so and, in
such event, the holders of the remaining Shares will not be able to elect
any Trustees. Under the rules of the NYSE applicable to listed companies,
the Fund is required to hold an annual meeting of shareholders in each
year.
Under Massachusetts law, under certain circumstances shareholders
could be held personally liable for the obligations of the Fund. However,
the Declaration of Trust disclaims shareholder liability for actions or
obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or executed
by the Fund. The Declaration of Trust provides for indemnification by the
Fund for all losses and expenses of any shareholder held personally liable
for obligations of the Fund. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Fund would be unable to meet its obligations.
The likelihood of such circumstances is remote.
Pursuant to the Trust's Dividend Reinvestment and Cash Purchase
Plan (the "Plan"), all dividends and capital gains distributions
("Distributions") declared by the Trust will be automatically reinvested
in additional full and fractional shares of the Trust ("Shares") unless
(i) a shareholder elects to receive cash or (ii) Shares are held in
nominee name, in which event the nominee should be consulted as to
participation in the Plan. Shareholders that participate in the Plan
("Participants") may, at their option, make additional cash investments
in Shares, semi-annually in amounts of at least $100, through payment to
Shareholder Financial Services, Inc., the agent for the Plan (the
"Agent"), and a service fee of $.75.
Depending upon the circumstances hereinafter described, Plan
Shares will be acquired by the Agent for the Participant's account through
receipt of newly issued Shares or the purchase of outstanding Shares on
the open market. If the market price of Shares on the relevant date
(normally the payment date) equals or exceeds their net asset value, the
Agent will ask the Trust for payment of the Distribution in additional
Shares at the greater of the Trust's net asset value determined as of the
date of purchase or 95% of the then-current market price. If the market
price is lower than net asset value, the Distribution will be paid in
cash, which the Agent will use to buy Shares on The New York Stock
Exchange (the "NYSE"), or otherwise on the open market to the extent
available. If the market price exceeds the net asset value before the
Agent has completed its purchases, the average purchase price per Share
paid by the Agent may exceed the net asset value, resulting in fewer
Shares being acquired than if the Distribution had been paid in Shares
issued by the Trust.
Participants may elect to withdraw from the Plan at any time and
thereby receive cash in lieu of Shares by sending appropriate written
instructions to the Agent. Elections received by the Agent will be
effective only if received more than ten days prior to the record date for
any Distribution; otherwise, such termination will be effective shortly
after the investment of such Distribution with respect to any subsequent
Distribution. Upon withdrawal from or termination of the Plan, all Shares
acquired under the Plan will remain in the Participant's account unless
otherwise requested. For full Shares, the Participant may either: (1)
receive without charge a share certificate for such Shares; or (2) request
the Agent (after receipt by the Agent of signature guaranteed instructions
by all registered owners) to sell the Shares acquired under the Plan and
remit the proceeds less any brokerage commissions and a $2.50 service fee.
Fractional Shares may either remain in the Participant's account or be
reduced to cash by the Agent at the current market price with the proceeds
remitted to the Participant. Shareholders who have previously withdrawn
from the Plan may rejoin at any time by sending written instructions
signed by all registered owners to the Agent.
There is no direct charge for participation in the Plan; all fees
of the Agent are paid by the Trust. There are no brokerage charges for
Shares issued directly by the Trust. However, each Participant will pay
a pro rata share of brokerage commissions incurred with respect to open
market purchases of Shares to be issued under the Plan. Participants will
receive tax information annually for their personal records and to assist
in Federal income tax return preparation. The automatic reinvestment of
Distributions does not relieve Participants of any income tax that may be
payable on Distributions.
The Plan may be terminated or amended at any time upon 30 days'
prior written notice to Participants which, with respect to a Plan
termination, must precede the record date of any Distribution by the
Trust. Additional information concerning the Plan may be obtained by
shareholders holding Shares registered directly in their names by writing
the Agent, Shareholder Financial Services, Inc., P.O. Box 173673, Denver,
CO, 80217-3673 or by calling 1-800-647-7374. Shareholders holding Shares
in nominee name should contact their brokerage firm or other nominee for
more information.
The Fund presently has provisions in its Declaration of Trust and
By-Laws (together, the "Charter Documents") which could have the effect
of limiting (i) the ability of other entities or persons to acquire
control of the Fund, (ii) the Fund's freedom to engage in certain
transactions or (iii) the ability of the Fund's Trustees or shareholders
to amend the Charter Documents or effect changes in the Fund's management.
Those provisions of the Charter Documents may be regarded as "anti-
takeover" provisions. Specifically, under the Fund's Declaration of
Trust, the affirmative vote of the holders of not less than two thirds
(66-2/3%) of the Fund's Shares outstanding and entitled to vote is
required to authorize the consolidation of the Fund with another entity,
a merger of the Fund with or into another entity (except for certain
mergers in which the Fund is the successor), a sale or transfer of all or
substantially all of the Fund's assets, the dissolution of the Fund, the
conversion of the Fund to an open-end company, and any amendment of the
Fund's Declaration of Trust that would affect any of the other provisions
requiring a two-thirds vote. However, a "majority" shareholder vote, as
defined in the Charter Documents, shall be sufficient to approve any of
the foregoing transactions that have been recommended by two-thirds of the
Trustees. Notwithstanding the foregoing, if a corporation, person or
entity is directly, or indirectly through its affiliates, the beneficial
owner of more than 5% of the outstanding shares of the Fund, the
affirmative vote of 80% (which is higher than that required under the 1940
Act) of the outstanding Shares of the Fund is required generally to
authorize any of the following transactions or to amend the provisions of
the Declaration of Trust relating to transactions involving: (i) a merger
or consolidation of the Fund with or into any such corporation or entity,
(ii) the issuance of any securities of the Fund to any such corporation,
person or entity for cash; (iii) the sale, lease or exchange of all or any
substantial part of the assets of the Fund to any such corporation, entity
or person (except assets having an aggregate market value of less than
$1,000,000); or (iv) the sale, lease or exchange to the Fund, in exchange
for securities of the Fund, of any assets of any such corporation, entity
or person (except assets having an aggregate fair market value of less
than $1,000,000). If two-thirds of the Board of Trustees has approved a
memorandum of understanding with such beneficial owner, however, a
majority shareholder vote will be sufficient to approve the foregoing
transactions. Reference is made to the Charter Documents of the Fund, on
file with the Securities and Exchange Commission, for the full text of
these provisions.
2. Inapplicable.
3. Inapplicable.
4.The Fund qualified for treatment as, and elected to be, a
regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code for its taxable year ended October 31, 1992, and intends to
continue to qualify as a RIC for each subsequent taxable year. However,
the Fund reserves the right not to qualify under Subchapter M as a RIC in
any year or years.
For each taxable year that the Fund qualifies for treatment as a
RIC, the Fund (but not its shareholders) will not be required to pay
Federal income tax. Shareholders will normally have to pay Federal income
taxes, and any state income taxes, on the dividends and distributions they
receive from the Fund. Such dividends and distributions derived from net
investment income or short-term capital gains are taxable to the
shareholder as ordinary dividend income regardless of whether the
shareholder receives such distributions in additional Shares or in cash.
Since the Fund's income is expected to be derived primarily from interest
rather than dividends, only a small portion, if any, of such dividends and
distributions is expected to be eligible for the Federal dividends-
received deduction available to corporations. The Fund does not
anticipate that any portion of its dividends or distributions will qualify
for pass-through treatment as "exempt-interest dividends" since less than
50% of its assets is permitted to be invested in municipal obligations.
Long-term or short-term capital gains may be generated by the sale
of portfolio securities and by transactions in options and futures
contracts. Distributions of long-term capital gains, if any, are taxable
to shareholders as long-term capital gains regardless of how long a
shareholder has held the Fund's shares and regardless of whether the
distribution is received in additional shares or in cash. For Federal
income tax purposes, if a capital gain distribution is received with
respect to Shares held for six months or less, any loss on a subsequent
sale or exchange of such Shares will be treated as long-term capital loss
to the extent of such long-term capital gain distribution. Capital gains
distributions are not eligible for the dividends-received deduction.
Any dividend or capital gains distribution received by a
shareholder from an investment company will have the effect of reducing
the net asset value of the shareholder's stock in that company by the
exact amount of the dividend or capital gains distribution. Furthermore,
capital gains distributions and dividends are subject to Federal income
taxes. If the net asset value of the Shares should be reduced below a
shareholder's cost as a result of the payment of dividends or realized
long-term capital gains, such payment would be a return of the
shareholder's investment capital to the extent of such reduction below the
shareholder's cost, but nonetheless could be fully taxable.
The tax treatment of listed put and call options written or
purchased by the Fund on debt securities and of future contracts entered
into by the Fund will be governed by Section 1256 of the Internal Revenue
Code. Absent a tax election to the contrary, each such position held by
the Fund will be marked-to-market (i.e., treated as if it were closed out)
on the last business day of each taxable year of the Fund, and all gain
or loss associated with transactions in such positions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or
loss. Positions of the Fund which consist of at least one debt security
and at least one option or futures contract which substantially diminishes
the Fund's risk of loss with respect of such debt security could be
treated as "mixed straddles" which are subject to the straddle rules of
Section 1092 of the Code, the operation of which may cause deferral of
losses, adjustments in the holding periods of debt securities and
conversion of short-term capital losses into long-term capital losses.
Certain tax elections exist for mixed straddles which reduce or eliminate
the operation of the straddle rules. Furthermore, as a regulated
investment company, the Fund would be subject to the requirement that less
than 30% of its gross income be derived from gains on the sale or other
disposition of securities held for less than three months. This
requirement may limit the Fund's ability to engage in options and futures
transactions. The Fund will monitor its transactions in options and
futures contracts and may make certain tax elections in order to mitigate
the effect of these rules and prevent disqualification of the Fund as a
regulated investment company under Subchapter M of the Code. Such tax
election may result in an increase in distribution of ordinary income
(relative to long-term capital gains) to shareholders.
The Internal Revenue Code requires that a holder (such as the
Fund) of a zero coupon security accrue a portion of the discount at which
the security was purchased as income each year even though the Fund
receives no interest payment in cash on the security during the year. As
an investment company, the Fund must pay out substantially all of its net
investment income each year. Accordingly, the Fund may be required to pay
out as an income distribution each year an amount which is greater than
the total amount of cash interest the Fund actually received. Such
distributions will be made from the cash assets of the Fund or by
liquidation of portfolio securities, if necessary. If a distribution of
cash necessitates the liquidation of portfolio securities, the Adviser
will select which securities to sell. The Fund may realize a gain or loss
from such sales. In the event the Fund realizes net capital gains from
such transactions, its shareholders may receive a larger capital gain
distribution than they would in the absence of such transactions.
It is the Fund's present policy, which may be changed by the Board
of Trustees, to pay monthly dividends to shareholders from net investment
income of the Fund. The Fund intends to distribute all of its net
investment income on an annual basis. The Fund will distribute all of its
net realized long-term and short-term capital gains, if any, at least once
per year. The Fund may, but is not required to, make such distributions
on a more frequent basis to the extent permitted by applicable law and
regulations.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute a specified minimum percentage (currently 98%) of its
taxable investment income earned from January 1 through December 31 of
that year and 98% of its capital gains realized in the period from
November 1 of the prior year through October 31 of that year, or else the
Fund must pay an excise tax on amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements, the
Fund's Board and the Adviser might determine in a particular year it would
be in the best interests of the Fund not to make such distributions at the
mandated level and to pay the excise tax which would reduce the amount
available for distributions to shareholders. If the Fund pays a dividend
in January which was declared in the previous December to shareholders of
record on a date in December, then such dividend or distribution will be
treated for tax purposes as being paid in December and will be taxable to
shareholders as if received in December.
Under the Fund's Dividend Reinvestment Plan (the "Plan"), all of
the Fund's dividends and distributions to shareholders will be reinvested
in full and fractional Shares. With respect to distributions made in
Shares issued by the Fund pursuant to the Plan, the amount of the
distribution for tax purposes is the fair market value of the Shares
issued on the reinvestment date. In the case of Shares purchased on the
open market, a participating shareholder's tax basis in each Share is its
cost. In the case of Shares issued by the Fund, the shareholder's tax
basis in each Share received is its fair market value on the reinvestment
date.
Distributions of investment company taxable income to shareholders
who are nonresident alien individuals or foreign corporations will
generally be subject to a 30% United States withholding tax under
provisions of the Internal Revenue Code applicable to foreign individuals
and entities, unless a reduced rate of withholding or a withholding
exemption is provided under an applicable treaty.
Under Section 988 of the Code, foreign currency gain or loss with
respect to foreign currency-denominated debt instruments and other foreign
currency-denominated positions held or entered into by the Fund will be
ordinary income or loss. In addition, foreign currency gain or loss
realized with respect to certain foreign currency "hedging" transactions
will be treated as ordinary income or loss.
5.The following information is provided as of February 3, 1995:
(1) (2) (3) (4)
Amount Held Amount Outstanding
by Registrant Exclusive of
Amount or for its Amount Shown
Title of Class Authorized Account Under (3)
Shares of Beneficial Unlimited None 29,064,849
Interest, $.01 par value
Item 11. Defaults and Arrears on Senior Securities.
Inapplicable.
Item 12. Legal Proceedings.
Inapplicable.
Item 13. Table of Contents of the Statement of Additional
Information.
Reference is made to Item 15 of the Statement of Additional
Information.
<PAGE>
Oppenheimer Multi-Sector Income Trust
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated February 27, 1995
This Statement of Additional Information is not a
Prospectus. This document contains additional information about the Fund
and supplements information in the Prospectus dated February 27, 1995.
It should be read together with the Prospectus, and the Registration
Statement on Form N-2, of which the Prospectus and this Statement of
Additional Information are a part, can be inspected and copied at public
reference facilities maintained by the Securities and Exchange Commission
(the "SEC") in Washington, D.C. and certain of its regional offices, and
copies of such materials can be obtained at prescribed rates from the
Public Reference Branch, Office of Consumer Affairs and Information
Services, SEC, Washington, D.C., 20549.
TABLE OF CONTENTS
Page
Investment Objective and Policies *
Management 35
Control Persons and Principal Holders of Securities 40
Investment Advisory and Other Services *
Brokerage Allocation and Other Practices 40
Tax Status *
Financial Statements 43
______________________
*See Prospectus
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 14. Cover Page.
Reference is made to the preceding page.
Item 15. Table of Contents.
Reference is made to the preceding page and to Items 16 through
23 of the Statement of Additional Information set forth below.
Item 16. General Information and History.
Inapplicable.
Item 17. Investment Objective and Policies.
Reference is made to Item 8 of the Prospectus.
Item 18. Management.
1 and 2. The Fund's Trustees and officers and their principal
occupations and business affiliations during the past five years are
listed below. The address of each Trustee and officer is Two World Trade
Center, New York, New York 10048-0203, unless another address is listed
below. All of the Trustees are also trustees of Oppenheimer Fund,
Oppenheimer Global Fund, Oppenheimer Time Fund, Oppenheimer Growth Fund,
Oppenheimer Target Fund, Oppenheimer Discovery Fund, Oppenheimer Global
Growth & Income Fund, Oppenheimer Global Emerging Growth Fund, Oppenheimer
Tax-Free Bond Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer
California Tax-Exempt Fund, Oppenheimer Multi-State Tax-Exempt Trust,
Oppenheimer Asset Allocation Fund, Oppenheimer Mortgage Income Fund,
Oppenheimer U.S. Government Trust, Oppenheimer Multi-Government Trust and
Oppenheimer Multi-Government Trust (the "New York-based
OppenheimerFunds"). Messrs. Spiro, Bishop, Bowen, Donohue, Farrar and Zack
respectively hold the same offices with the other New York-based
OppenheimerFunds as with the Fund.
Leon Levy, Chairman of the Board of Trustees; Age: 69
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate development).
Leo Cherne, Trustee; Age: 82
386 Park Avenue South, New York, New York 10016
Chairman Emeritus of the International Rescue Committee
(philanthropic organization); formerly Executive Director of The
Research Institute of America.
Robert G. Galli, Trustee*; Age: 61
Vice Chairman of the Adviser and Vice President and Counsel of
Oppenheimer Acquisition Corp., the Adviser's parent holding company;
formerly he held the following positions: a director of the Adviser
and Oppenheimer Funds Distributor, Inc. (the "Distributor"), Vice
President and a director of HarbourView Asset Management Corporation
("HarbourView") and Centennial Asset Management Corporation
("Centennial"), investment advisory subsidiaries of the Adviser, a
director of Shareholder Financial Services, Inc. ("SFSI") and
Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of
the Adviser, an officer of other OppenheimerFunds and Executive Vice
President and General Counsel of the Adviser and the Distributor.
Benjamin Lipstein, Trustee; Age: 71
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; Director of Sussex Publishers,
Inc. (Publishers of Psychology Today and Mother Earth News); and
Director of Spy Magazine, L.P.
Elizabeth B. Moynihan, Trustee; Age: 65
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery
of Art (Smithsonian Institution), the Institute of Fine Arts (New
York University), National Building Museum; a member of the Trustees
Council, Preservation League of New York State; a member of the Indo-
U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age: 67
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil and gas
producer), Enron-Dominion Cogen Corp. (cogeneration company), Kemper
Corporation (insurance and financial services company), Fidelity Life
Association (mutual life insurance company); formerly Chairman of the
Board of ICL, Inc. (information systems) and President and Chief
Executive Officer of the Conference Board, Inc. (international
economic and business research).
Edward V. Regan, Trustee; Age: 64
40 Park Avenue, New York, New York 10016
President of Jerome Levy Economics Institute; a member of the U.S.
Competitiveness Policy Council; a director or GranCare, Inc.
(healthcare provider); formerly New York State Comptroller and
trustee, New York State and Local Retirement Fund.
_____________________________________
* A Trustee who is an "interested person" of the Fund as defined in
the Investment Company Act.
Russell S. Reynolds, Jr., Trustee; Age: 63
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Hospital and the Greenwich Historical Society.
Sidney M. Robbins, Trustee; Age: 82
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions,
Graduate School of Business, Columbia University; Visiting Professor
of Finance, University of Hawaii; a director of The Korea Fund, Inc.
and The Malaysia Fund, Inc. (closed-end investment companies); a
member of the Board of Advisors, Olympus Private Placement Fund,
L.P.; Professor Emeritus of Finance, Adelphi University.
Donald W. Spiro, President and Trustee*; Age: 69
Chairman Emeritus and a director of the Adviser; formerly Chairman
of the Adviser and the Distributor.
Pauline Trigere, Trustee; Age: 82
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton K. Yeutter, Trustee; Age: 64
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), Farmers
Insurance Company (insurance), FMC Corp. (chemicals and machinery),
Lindsay Manufacturing Co. (irrigation equipment), Texas Instruments,
Inc. (electronics) and The Vigoro Corporation (fertilizer
manufacturer); formerly (in descending chronological order)
Counsellor to the President (Bush) for Domestic Policy, Chairman of
the Republican National Committee, Secretary of the U.S. Department
of Agriculture, and U.S. Trade Representative.
Thomas P. Reedy, Vice President and Portfolio Manager; Age: 32
Vice President of the Manager; an officer of other OppenheimerFunds;
formerly a Securities Analyst for the Manager.
David Rosenberg, Vice President and Portfolio Manager; Age: 36
Vice President of the Adviser; an officer of other OppenheimerFunds;
formerly an officer and Portfolio Manager for Delaware Investment
Advisors and for one of its mutual funds.
__________________________
* A Trustee who is an "interested person" of the Fund as defined in
the Investment Company Act.
Ashwin Vasan, Vice President and Portfolio Manager; Age: 32
Vice President of the Adviser; an officer of other OppenheimerFunds;
formerly a Securities Analyst for the Adviser, prior to which he was
a Securities Analyst for Citibank, N.A.
Andrew J. Donohue, Secretary; Age: 44
Executive Vice President and General Counsel of the Adviser and the
Distributor; an officer of other OppenheimerFunds; formerly Senior
Vice President and Associate General Counsel of the Adviser and the
Distributor, prior to which he was a partner in Kraft & McManimon (a
law firm), an officer of First Investors Corporation (a broker-
dealer) and First Investors Management Company, Inc. (broker-dealer
and investment adviser), and a director and an officer of First
Investors Family of Funds and First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age: 58
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Adviser; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and SFSI;
an officer of other OppenheimerFunds.
Robert G. Zack, Assistant Secretary; Age: 46
Senior Vice President and Associate General Counsel of the Adviser;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Robert Bishop, Assistant Treasurer; Age: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Adviser/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Adviser, prior to which he was an Accountant for Yale &
Seffinger, P.C., an accounting firm; and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott Farrar, Assistant Treasurer; Age: 29
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Adviser/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Adviser, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman & Co., a bank, and previously
a Senior Fund Accountant for State Street Bank & Trust Company.
The Board of Trustees does not have an executive or investment
committee. The Trustees of the Fund have appointed a study committee
consisting of Messrs. Robbins (Chairman) and Lipstein and Mrs. Moynihan,
none of whom is an "interested person" of the Adviser or the Fund. The
study committee's function is to report to the Board on matters that
include (i) legal and regulatory developments, (ii) periodic renewals of
the Advisory Agreement, (iii) review of the transfer agent and registrar
agreement, (iv) review of the administrative services provided by Mitchell
Hutchins Asset Management, Inc., (v) portfolio management, (vi) valuation
of portfolio securities, (vii) custodian relationships and use of foreign
subcustodians, (viii) code of ethics matters, policy on use of insider
information, (ix) consideration of tender offers and other repurchases of
fund shares and possible conversion to open-end status, and (x)
indemnification and insurance of the Fund's officers and trustees.
3. Inapplicable.
4. The officers of the Fund are affiliated with the Manager; they
and the Trustees of the Fund who are affiliated with the Adviser (Messrs.
Galli and Spiro; Mr. Spiro is also an officer) receive no salary or fee
from the Fund. The Trustees of the Fund (including Mr. Delaney, a former
Trustee, but excluding Messrs. Galli and Spiro) received the total amounts
shown below from all 19 of the New York-based OppenheimerFunds (including
the Fund) listed in the first paragraph of Item 18, parts 1 and 2 (and
from Oppenheimer Global Environment Fund, a former New York-based
OppenheimerFund), for services in the positions shown:
<TABLE>
<CAPTION>
Total Compensation From All
Name Position New York-based OppenheimerFunds1
<S> <C> <C>
Leon Levy Chairman and Trustee $141,000.00
Leo Cherne Audit Committee Member and $ 68,800.00
Trustee
Edmund T. Delaney Study Committee Member and $ 86,200.00
Trustee2
Benjamin Lipstein Study Committee Member and $ 86,200.00
Trustee
Elizabeth B. MoynihanStudy Committee Member3 and $ 60,625.00
Trustee
Kenneth A. Randall Audit Committee Member and $ 78,400.00
Trustee
Edward V. Regan Audit Committee Member3 and $ 56,275.00
Trustee
Russell S. Reynolds Trustee $ 52,100.00
Jr.
Sidney M. Robbins Study Committee Chairman, $122,100.00
Audit Committee Vice-Chairman
and Trustee
Pauline Trigere Trustee $ 52,100.00
Clayton K. Yeutter Trustee $ 52,100.00
<FN>
______________________
1 For the 1994 calendar year.
2 Board and committee positions held during a portion of the period
shown.
3 Committee position held during a portion of the period shown.
</TABLE>
The Fund has adopted a retirement plan that provides for payment to
a retired Trustee of up to 80% of the average compensation paid during
that Trustee's five years of service in which the highest compensation was
received. A Trustee must serve in that capacity for any of the New York-
based OppenheimerFunds for at least 15 years to be eligible for the
maximum payment. No payments have been made by the Fund under the plan
as of October 31, 1994. The total accrual by all the New York-based
OppenheimerFunds referred to in the preceding paragraph for their
collective projected benefit obligations under the plan was $117,741 as
of October 31, 1994.
Item 19. Control Persons and Principal Holders of Securities.
1. Inapplicable.
2. As of February 15, 1995, the only persons owning of record or
known by the Fund to own beneficially 5% or more of the outstanding Shares
were: (i) Cede & Co., c/o Depository Trust Co., 7 Hanover Square, 22nd
Floor Dividend Department, New York, New York 10004, a nominee which owned
of record 22,574,793.9385 Shares (approximately 77.67% of the Shares then
outstanding) and (ii) Kray & Co., One Financial Place, 440 South LaSalle
Street, Chicago, Illinois 60605-1028, a nominee which owned of record
552,448.00 Shares (approximately 1.9% of the Shares then outstanding).
3. As of February 15, 1995, the trustees and officers of the Fund
as a group owned less than 1% of the outstanding Shares.
Item 20. Investment Advisory and Other Services.
Reference is made to Item 9 of the Prospectus.
Item 21. Brokerage Allocation and Other Practices.
1 and 2. During the fiscal years ended October 31, 1992, 1993
and 1994, the Fund paid approximately $3,032, $25,643 and $16,685,
respectively, in brokerage commissions. The Fund will not effect
portfolio transactions through any broker (i) which is an affiliated
person of the Fund, (ii) which is an affiliated person of such affiliated
person or (iii) an affiliated person of which is an affiliated person of
the Fund or its Adviser. There is no principal underwriter of shares of
the Fund. As most purchases of portfolio securities made by the Fund are
principal transactions at net prices, the Fund incurs little or no
brokerage costs. The Fund deals directly with the selling or purchasing
principal or market maker without incurring charges for the services of
a broker on its behalf unless it is determined that a better price or
execution may be obtained by using the services of a broker. Purchases
of portfolio securities from underwriters include a commission or
concession paid by the issuer to the underwriter, and purchases from
dealers include a spread between the bid and asked price. Transactions
in foreign securities markets generally involve the payment of fixed
brokerage commissions, which are usually higher than those in the United
States. The Fund seeks to obtain prompt execution of orders at the most
favorable net price.
3. The Advisory Agreement between the Fund and the Advisor (the
"Advisory Agreement") contains provisions relating to the selection of
brokers, dealers and futures commission merchants (collectively referred
to as "brokers") for the Fund's portfolio transactions. The Adviser is
authorized by the Advisory Agreement to employ brokers as may, in its best
judgment based on all relevant factors, implement the policy of the Fund
to obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable price obtainable) of such
transactions. The Adviser need not seek competitive bidding but is
expected to minimize the commissions paid to the extent consistent with
the interests and policies of the Fund. The Fund will not effect
portfolio transactions through affiliates of the Adviser.
Certain other investment companies advised by the Adviser and its
affiliates have investment objectives and policies similar to those of the
Fund. If possible, concurrent orders to purchase or sell the same
security by more than one of the accounts managed by the Adviser or its
affiliates are combined. The transactions effected pursuant to such
combined orders are averaged as to price and allocated in accordance with
the purchase or sale orders actually placed for each account. If
transactions on behalf of more than one fund during the same period
increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or
quantity. When the Fund engages in an option transaction, ordinarily the
same broker will be used for the purchase or sale of the option and any
transactions in the security to which the option relates.
Under the Advisory Agreement, if brokers are used for portfolio
transactions, the Adviser may select brokers for their execution and/or
research services, on which no dollar value can be placed. Information
received by the Adviser for those other accounts may or may not be useful
to the Fund. The commissions paid to such dealers may be higher than
another qualified dealer would have charged if a good faith determination
is made by the Adviser that the commission is reasonable in relation to
the services provided. Subject to applicable regulations, sales of shares
of the Fund and/or investment companies advised by the Adviser or its
affiliates may also be considered as a factor in directing transactions
to brokers, but only in conformity with the price, execution and other
considerations and practices discussed above.
Such research, which may be provided by a broker through a third
party, includes information on particular companies and industries as well
as market, economic or institutional activity areas. It serves to broaden
the scope and supplement the research activities of the Adviser, to make
available additional views for consideration and comparisons, and to
enable the Adviser to obtain market information for the valuation of
securities held in the Fund's portfolio or being considered for purchase.
4. During the fiscal years ended October 31, 1992, 1993 and 1994,
$0, $12,852 and $2,689 were paid to brokers as commissions in return for
research services.
5. Inapplicable.
Item 22. Tax Status.
Reference is made to Item 10 of the Prospectus.
Item 23. Financial Statements.
1. Statement of Investments
2. Statement of Assets and Liabilities
3. Statement of Operations
4. Statements of Changes in Net Assets
5. Financial Highlights
6. Notes to Financial Statements
7. Independent Auditors' Report
8. Independent Auditors' Consent
<PAGE>
INDEPENDENT AUDITORS' REPORT
Oppenheimer Multi-Sector Income Trust
The Board of Trustees and Shareholders of
Oppenheimer Multi-Sector Income Trust:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Multi-Sector Income Trust as of October 31, 1994, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the six-year period then
ended and the period from March 24, 1988 (commencement of operations) to October
31, 1988. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994 by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer Multi-Sector Income Trust as of October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the six-year period then ended and the period from March
24, 1988 (commencement of operations) to October 31, 1988, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
November 21, 1994
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1994
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount See Note 1
-------------- ------------
<S> <C> <C>
MONEY MARKET SECTOR -- 3.6%
Repurchase agreement with The First Boston Corp., 4.75%, dated
10/31/94, to be repurchased at $10,501,385 on 11/1/94,
collateralized by U.S. Treasury Nts., 4.75%, 2/15/97, with a
value of $10,717,578 (Cost $10,500,000).......................... $ 10,500,000 $ 10,500,000
-------------- ------------
U.S. GOVERNMENT SECTOR -- 6.9%
U.S. Treasury Bonds:
8.875%, 7/15/95.................................................. 3,500,000 3,571,092
12%, 8/15/13..................................................... 4,000,000 5,301,248
8.125%, 8/15/21.................................................. 5,000,000 5,020,309
U.S. Treasury Nts., 9.25%, 1/15/96................................. 6,300,000 6,506,715
------------
Total U.S. Government Sector (Cost $21,096,633).................... 20,399,364
------------
<CAPTION>
Units
--------------
<S> <C> <C>
CONVERTIBLE SECTOR -- 1.3%
RIGHTS, WARRANTS AND CERTIFICATES -- 0.2%
Ames Department Stores, Inc.:
Excess Cash Flow Payment Ctfs. .................................. 40,300 403
Litigation Trust................................................. 128,889 1,289
Becker Gaming, Inc. Wts., Exp. 11/00 (5)........................... 25,000 50,000
Eye Care Centers of America, Inc. Wts., Exp. 10/03................. 1,800 9,000
Gaylord Container Corp. Wts., Exp. 7/96............................ 90,000 630,000
Purity Supreme, Inc. Wts., Exp. 8/97 (5)........................... 7,797 156
Terex Corp. Rts., Exp. 7/96 (5).................................... 186 233
------------
691,081
<CAPTION>
Shares
--------------
<S> <C> <C>
PREFERRED STOCKS -- 1.1%
AMR Corp., $3.00 Cum. Cv. Depositary Shares, Series A (5).......... 20,000 842,500
First Nationwide Bank, FSB, 11.50%................................. 13,000 1,339,000
Southdown, Inc., Cv., Series D..................................... 25,000 931,250
------------
3,112,750
------------
Total Convertible Sector (Cost $3,664,045)......................... 3,803,831
------------
</TABLE>
3
<PAGE> 4
STATEMENT OF INVESTMENTS October 31, 1994 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
-------------- ------------
<S> <C> <C>
CORPORATE SECTOR -- 36.6%
COMMON STOCKS -- 1.3%
Capital Gaming, Inc. (6)........................................... 7,198 $ 51,286
Hollywood Casino Corp. ............................................ 63,333 383,956
Leaseway Transportation Corp. ..................................... 28,000 371,000
Petrolane, Inc., Cl. B. ........................................... 152,712 2,137,968
Triangle Wire & Cable, Inc. (5).................................... 84,444 759,996
------------
3,704,206
<CAPTION>
Face Amount
--------------
<S> <C> <C>
CORPORATE BONDS AND NOTES -- 34.8%
BASIC MATERIALS -- 7.8%
Chemicals -- 2.0%
Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03.............. $ 3,000,000 3,067,500
OSI Specialities Holdings Co., Units............................... 500,000 307,500
Rexene Corp., 10% 2nd Priority Nts., 11/15/02 (6).................. 2,743,000 2,593,660
------------
5,968,660
Metals -- 2.2%
Acme Metals, Inc.:
12.50% Sr. Sec. Nts., 8/1/02..................................... 1,500,000 1,511,250
0%/13.50% Sr. Sec. Disc. Nts., 8/1/04............................ 750,000 517,500
Kaiser Aluminum & Chemical Corp.:
9.875% Sr. Nts., 2/15/02......................................... 1,650,000 1,513,875
12.75% Sr. Sub. Nts., 2/1/03..................................... 200,000 199,500
NL Industries, Inc.:
11.75% Sr. Sec. Nts., 10/15/03................................... 500,000 511,250
0%/13% Sr. Sec. Disc. Nts., 10/15/05 (3)......................... 500,000 312,500
Republic Engineered Steels, Inc., 9.875% Fst. Mtg. Nts.,
12/15/01......................................................... 900,000 830,250
Weirton Steel Corp., 11.50% Sr. Nts., 3/1/98....................... 1,000,000 1,038,750
------------
6,434,875
Paper and Forest Products -- 3.6%
Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01.................. 2,000,000 2,085,000
Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03........................ 1,000,000 925,000
Rainy River Forest Products, 10.75% Sr. Sec. Nts., 10/15/01........ 800,000 802,000
</TABLE>
4
<PAGE> 5
STATEMENT OF INVESTMENTS October 31, 1994 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount See Note 1
-------------- ------------
<S> <C> <C>
Paper and Forest Products (Continued)
Repap Wisconsin, Inc., 9.25% Fst. Priority Sr. Sec. Nts., 2/1/02... $ 1,000,000 $ 905,000
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00........... 1,100,000 1,080,750
Stone Container Corp.:
9.875% Sr. Nts., 2/1/01.......................................... 2,250,000 2,115,000
10.75% Fst. Mtg. Nts., 10/1/02................................... 1,720,000 1,702,800
Stone Savannah River Pulp & Paper Corp., 14.125% Sr. Sub Nts.,
12/15/00......................................................... 900,000 965,250
------------
10,580,800
CONSUMER CYCLICALS -- 11.2%
Automotive -- 1.4%
Envirotest Systems Corp.:
9.125% Sr. Nts., 3/15/01......................................... 700,000 635,250
9.625% Sr. Sub. Nts., 4/1/03..................................... 1,500,000 1,348,125
Foamex LP/JPS Automotive Corp., Units (5).......................... 1,750,000 953,750
JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01........... 1,000,000 1,000,000
SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02............................ 250,000 256,250
------------
4,193,375
Construction Supplies and Development -- 2.5%
NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03.............................. 1,500,000 1,305,000
Triangle Pacific Corp., 10.50% Sr. Nts., 8/1/03.................... 2,000,000 1,970,000
USG Corp.:
10.25% Sr. Sec. Nts., 12/15/02................................... 1,900,000 1,945,125
8.75% Debs., 3/1/17.............................................. 2,450,000 2,137,625
------------
7,357,750
Consumer Goods and Services -- 3.1%
Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B,
5/27/98.......................................................... 3,000,000 2,021,250
Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03... 2,500,000 2,337,500
Insilco Corp., 10.375% Sr. Sec. Nts., 7/1/97....................... 2,087,000 2,118,305
PT Polysindo Eka Perkasa, 13% Sr. Nts., 6/15/01.................... 1,000,000 990,000
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05........... 2,000,000 1,795,000
------------
9,262,055
Entertainment -- 0.6%
Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A,
11/15/00 (5)..................................................... 550,000 464,750
Capitol Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A,
11/15/00 (5)..................................................... 400,000 340,000
Empress River Casino Finance Corp., 10.75% Gtd. Sr. Nts., 4/1/02... 750,000 652,500
</TABLE>
5
<PAGE> 6
STATEMENT OF INVESTMENTS October 31, 1994 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount See Note 1
-------------- ------------
<S> <C> <C>
Entertainment (Continued)
Lady Luck Gaming Finance Corp., 10.50% Fst. Mtg. Nts., Series B,
3/1/01........................................................... $ 500,000 $ 182,500
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03................ 250,000 213,125
------------
1,852,875
Media -- 0.5%
Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01.... 1,300,000 1,365,000
------------
Real Estate Development -- 0.3%
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts.,
4/1/02........................................................... 1,000,000 895,000
------------
Retail -- 2.8%
Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts.,
Series B, 9/1/03................................................. 1,500,000 1,432,500
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01................ 2,000,000 1,970,000
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03........... 1,800,000 1,449,000
Finlay Enterprises, Inc., 0%/12% Sr. Disc. Debs., 5/1/05 (3)....... 500,000 291,250
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03................ 1,250,000 1,187,500
Musicland Group, Inc. (The), 9% Sr. Sub. Nts., 6/15/03............. 700,000 622,125
R.H. Macy & Co., Inc., 14.50% Sr. Sub. Debs., 10/15/98 (2)......... 1,800,000 1,269,000
------------
8,221,375
CONSUMER NON-CYCLICALS -- 3.3%
Food -- 0.5%
Kash 'N Karry Food Stores, Inc., 14% Sub. Debs., 2/1/01 (2)........ 600,000 183,000
Royal Crown Corp., 9.75% Sr. Sec. Nts., 8/1/00..................... 1,500,000 1,380,000
------------
1,563,000
Food and Drug Distribution -- 2.3%
Di Giorgio Corp., 12% Sr. Nts., 2/15/03............................ 2,050,000 2,060,250
Grand Union Co.:
11.25% Sr. Nts., 7/15/00......................................... 400,000 360,000
12.25% Sr. Sub. Nts., 7/15/02.................................... 3,000,000 2,115,000
Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99....... 1,400,000 1,190,000
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03.................... 1,000,000 992,500
------------
6,717,750
Healthcare -- 0.5%
American Medical International, Inc., 9.50% Sr. Sub. Nts.,
Series B, 4/15/06................................................ 800,000 808,000
Total Renal Care, Inc., Units...................................... 1,000,000 735,000
------------
1,543,000
</TABLE>
6
<PAGE> 7
STATEMENT OF INVESTMENTS October 31, 1994 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount See Note 1
-------------- ------------
<S> <C> <C>
ENERGY -- 2.6%
Aftermarket Technology Corp., 12% Sr. Sub. Nts., 8/1/04 (5)........ $ 1,100,000 $ 1,116,500
Ferrellgas LP/Ferrellgas Finance Corp., 10% Sr. Nts., 8/1/01....... 500,000 496,250
Mesa Capital Corp., 0%/12.75% Sec. Disc. Nts., 6/30/98 (3)......... 1,411,000 1,213,460
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02............ 1,000,000 1,135,000
Presidio Oil Co.:
11.50% Sr. Sec. Nts., Series B, 9/15/00.......................... 1,000,000 950,000
13.90% Sr. Sub. Gas Indexed Nts., Series B, 7/15/02 (4).......... 1,800,000 1,611,000
Wainoco Oil Corp., 12% Sr. Nts., 8/1/02............................ 1,000,000 1,035,000
------------
7,557,210
FINANCIAL -- 1.1%
American Life Holding Co., 11.25% Sr. Sub. Nts., 9/15/04........... 940,000 944,700
Card Establishment Services, Inc., 10% Sr. Sub. Nts.,
Series B, 10/1/03................................................ 2,500,000 2,325,000
------------
3,269,700
INDUSTRIAL -- 4.2%
Containers -- 0.9%
Calmar, Inc., 12% Sr. Sec. Nts., 12/15/97.......................... 1,500,000 1,500,000
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04.......... 1,300,000 1,267,500
------------
2,767,500
General Industrial -- 2.5%
American Standard, Inc.:
9.875% Sr. Sub. Nts., 6/1/01..................................... 1,650,000 1,637,625
0%/10.50% Sr. Sub. Disc. Debs., 6/1/05 (3)....................... 300,000 199,500
Farley, Inc., 0% Sub. Debs., 12/30/12.............................. 115,000 12,075
Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97............... 2,600,000 2,629,250
Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01............. 2,650,000 2,994,500
------------
7,472,950
Transportation -- 0.8%
Kloster Cruise Ltd., 13% Sr. Sec. Nts., 5/1/03..................... 500,000 485,000
Tiphook Financial Corp.:
7.125% Gtd. Nts., 5/1/98......................................... 1,000,000 697,500
8% Gtd. Nts., 3/15/00............................................ 200,000 136,000
Transtar Holdings LP/Transtar Capital Corp.,
0%/13.375% Sr. Disc. Nts., Series B, 12/15/03 (3)................ 2,000,000 1,095,000
------------
2,413,500
</TABLE>
7
<PAGE> 8
STATEMENT OF INVESTMENTS October 31, 1994 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount See Note 1
-------------- ------------
<S> <C> <C>
TECHNOLOGY -- 4.6%
Aerospace/Defense -- 0.6%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98...................... $ 1,750,000 $ 1,443,750
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02.................... 200,000 193,000
------------
1,636,750
Cable Television -- 1.0%
Echostar Communications Corp., Units............................... 1,350,000 644,625
Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts.,
Series B, 11/1/03 (4)............................................ 1,500,000 1,357,500
International CableTel, Inc., 0%/10.875% Sr. Def. Cpn. Nts.,
10/15/03 (3)..................................................... 1,500,000 828,750
------------
2,830,875
Communications -- 2.2%
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03 (3).......... 2,250,000 1,518,750
GS Technologies Operating Co., Inc., 12% Sr. Gtd. Nts., 9/1/04..... 900,000 920,250
Horizon Cellular Telephone LP/Horizon Finance Corp., 0%/11.375%
Sr. Sub. Disc. Nts., 10/1/00 (3)................................. 2,500,000 1,812,500
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr.
Sub. Disc. Nts., 8/1/03 (3)...................................... 3,500,000 2,362,500
------------
6,614,000
Technology -- 0.8%
Bell & Howell Holdings Co., 0%/11.5% Sr. Disc. Debs.,
Series B, 3/1/05 (3)............................................. 4,700,000 2,373,500
------------
STRUCTURED INSTRUMENTS -- 0.5%
Lehman Brothers Holdings, Inc., 5.225% Standard & Poor's 500
Index-Linked Nts., 12/8/94 (5)................................... 500,000 526,650
Salomon Brothers, Inc., Standard & Poor's 500 Index-Linked Nts.:
5.3125%, 12/13/94 (5)............................................ 500,000 545,000
5.625%, 1/12/95 (5).............................................. 500,000 585,000
------------
1,656,650
------------
Total Corporate Sector (Cost $111,074,393)......................... 108,252,356
------------
</TABLE>
8
<PAGE> 9
STATEMENT OF INVESTMENTS October 31, 1994 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount See Note 1
-------------- ------------
<S> <C> <C>
INTERNATIONAL SECTOR -- 38.1%
FOREIGN GOVERNMENT OBLIGATIONS -- 31.8%
Argentina (Republic of):
Bonds, 8.375%, 12/20/03.......................................... $ 5,000,000 $ 4,062,540
Bonds, 4.25%, 3/31/23............................................ 1,000,000 465,625
Past Due Interest Bonds, 5%, 3/31/05 (4)(6)...................... 3,000,000 2,172,187
Brazil (Federal Republic of):
Interest Due and Unpaid Bonds, 6.606%, 1/1/01 (4)................ 980,000 801,150
Nts., Banco Estado Minas Gerais:
10%, 1/15/96................................................... 750,000 728,437
8.25%, 2/10/00................................................. 1,000,000 812,500
Par Bonds, 4%, 4/15/24........................................... 4,000,000 1,612,000
Canada (Government of) Debs., 10.50%, 7/1/00 (CAD) (1)............. 4,140,000 3,310,450
Denmark (Kingdom of) Bonds:
9%, 11/15/98 (DKK)(1)............................................ 4,880,000 837,753
6%, 12/10/99 (DKK) (1)........................................... 13,000,000 1,965,807
Ecuador (Republic of) Bonds, 0%, 12/29/49 (5)(7)................... 2,500,000 1,471,875
First Australia National Mortgage Acceptance Corp. Ltd. Bonds,
Series 22, 11.40%, 12/15/01 (AUD) (1)............................ 4,834,380 3,624,050
International Bank for Reconstruction and Development Bonds,
12.50%, 7/25/97 (NZD)(1)......................................... 10,730,000 7,139,831
International Finance Corp., Sr. Nts., 10.65%, 4/26/99 (ITL) (1)... 1,000,000,000 639,352
Morocco (Kingdom of):
Loan Participation Agreement:
Tranche A, 5.934%, 1/1/09 (4)(5)............................... 4,000,000 2,835,000
Tranche B, 5.938%, 1/1/04 (4)(5)............................... 1,000,000 754,375
New South Wales Treasury Corp., 7% Gtd. Exch. Bonds, 4/1/04........ 3,740,000 2,170,234
New Zealand (Government of) Bonds, 10%, 7/15/97 (NZD) (1).......... 1,560,000 985,959
Nobra Euro Brazil (Federal Republic of) Sr. Debs.,
Banco Do Nordeste, 9%, 11/12/96.................................. 5,430,000 5,178,862
Oesterreich Kontrollbank Sr. Gtd. Nts., 10%, 8/10/99 (ITL) (1)..... 1,000,000,000 624,766
Repackaged Argentina Domestic Securities Trust I, 14.75%,
9/1/02 (5)....................................................... 3,000,000 2,842,500
South African (Republic of) Loan Participation Agreement,
Electricity Supply Commission, 7.25%, 10/14/98 (4)(5)............ 8,025,158 7,583,774
Spain (Kingdom of):
Bonds, 11.45%, 8/30/98 (ESP) (1)................................. 1,073,500,000 8,677,604
Gtd. Bonds, Bonos y Obligacion del Estadi, 12.25%, 3/25/00 (ESP)
(1)............................................................ 200,000,000 1,655,756
Treasury Corp. of Victoria Gtd. Nts., 12.50%, 7/15/00 (AUD) (1).... 2,700,000 2,170,111
</TABLE>
9
<PAGE> 10
STATEMENT OF INVESTMENTS October 31, 1994 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount See Note 1
-------------- ------------
<S> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
United Kingdom Treasury Nts.:
12%, 11/20/98 (GBP)(1)........................................... $ 2,465,000 $ 4,466,592
12.25%, 3/26/99 (GBP)(1)......................................... 1,500,000 2,753,167
United Mexican States:
Gtd. Petroleos Mexicanos, 7.60%, 6/15/00......................... 1,000,000 893,300
Mexico UMS Combined Facility 3, Loan Participation Agreement,
5.6875%, 3/20/00 (4)(5)........................................ 583,617 513,583
New New Money Loan Participation Agreement, Tranche A, 6.0625%,
3/25/05 (4)(5)................................................. 6,480,050 5,301,491
Petacalco Topolobampo Trust:
8.125% Sr. Nts., 12/15/03 (5).................................. 600,000 504,000
8.125% Sr. Sec. Unsub. Nts., 12/15/03.......................... 2,000,000 1,680,000
Treasury Bills:
0%, 1/19/95 (MXP) (1).......................................... 12,385,490 3,494,438
0%, 4/6/95 (MXP) (1)........................................... 7,278,440 1,994,809
0%, 5/4/95 (MXP) (1)........................................... 3,685,070 999,735
Venezuela (Republic of):
Debs., 6.75%, 9/20/95 (5)........................................ 3,500,000 3,338,125
Debs., 9%, 5/27/96............................................... 3,000,000 2,823,750
------------
93,885,488
FOREIGN CORPORATE BONDS AND NOTES -- 0.9%
Bayerische Landesanstalt Sr. Nts., 10.625%, 5/12/00 (ITL) (1)(9)... 1,000,000,000 628,818
General Electric Capital Corp., 10.375% Nts., 6/14/00 (ITL) (1).... 2,440,000,000 1,518,497
PT Polysindo Eka Perkasa Promissory Note, 0%, 10/23/96 (IDR) (1)... 2,000,000,000 650,374
------------
2,797,689
PUT OPTIONS PURCHASED -- 0.0% Date/Price
European OTC Deutsche Mark/U.S. Dollar.............Nov.2/1.60DEM 21,930,474 1,455
European OTC Deutsche Mark/U.S. Dollar Put.........Nov.8/1.60DEM 10,965,237 727
------------
2,182
</TABLE>
10
<PAGE> 11
STATEMENT OF INVESTMENTS October 31, 1994 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount See Note 1
-------------- ------------
<S> <C> <C>
STRUCTURED INSTRUMENTS -- 5.4%
Argentina Local Market Securities Trust, Series 1994-II, 11.30%,
4/1/00 (5)....................................................... $ 2,869,565 $ 2,865,978
Bayerische Landesbank, N.Y. Branch, Mexican Peso Linked
Confidence Nts., Girozentrale Branch, 35.50%, 12/30/94 (5)....... 1,500,000 1,470,000
Citibank CD:
17.20%, 12/2/94 (CLP) (1)(9)..................................... 2,074,000,000 5,047,611
16.75%, 12/27/94 (CLP) (1)(9).................................... 1,279,661,812 3,109,518
16.25%, 5/30/95 (CLP) (1)(9)..................................... 462,456,598 1,125,507
10.50%, 7/14/95 (ARA) (1)(9)..................................... 1,500,000 1,500,276
Morgan Guaranty Trust Co. of New York (Singapore Branch) CD,
12.15%, 2/3/95 (9)............................................. 2,113,250,000 899,629
------------
Total Structured Instruments....................................... 16,018,519
------------
Total International Sector (Cost $114,000,901)..................... 112,703,878
------------
MORTGAGE-BACKED SECTOR -- 13.0%
AGENCY-FULL FAITH AND CREDIT -- 5.3%
Government National Mortgage Assn.:
12%, 11/20/13.................................................... 427,220 473,381
12%, 2/20/15..................................................... 332,119 369,492
12%, 9/20/15..................................................... 350,271 388,812
8%, 5/15/24...................................................... 2,480,667 2,383,746
8%, 5/15/24...................................................... 627,061 602,560
8%, 8/15/24...................................................... 891,209 856,388
8%, 9/15/24...................................................... 11,211,871 10,773,824
------------
15,848,203
AGENCY-GOVERNMENT SPONSORED -- 7.7%
Federal Home Loan Mortgage Corp:
Certificates of Participation:
12%, 5/1/10.................................................... 1,002,360 1,099,779
12%, 10/1/11................................................... 675,390 741,639
12%, 8/1/13.................................................... 46,282 50,823
12%, 8/1/14.................................................... 1,113,976 1,225,540
12%, 10/1/14................................................... 312,237 342,865
12%, 6/1/15.................................................... 468,437 515,617
13%, 6/1/15.................................................... 2,218,916 2,492,930
6.65%, 4/15/21................................................. 4,700,000 4,170,873
</TABLE>
11
<PAGE> 12
STATEMENT OF INVESTMENTS October 31, 1994 (Continued)
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Market Value
Face Amount See Note 1
-------------- ------------
<S> <C> <C>
MORTGAGE-BACKED SECTOR (CONTINUED)
AGENCY GOVERNMENT SPONSORED (CONTINUED)
Interest-Only Stripped Mtg.-Backed Security:
Trust 221, 7.50%, 5/25/23 (8).................................. $ 29,195,033 $ 11,249,211
Trust 240, 7%, 9/25/23 (8)..................................... 2,113,469 807,411
------------
22,696,688
------------
Total Mortgage-Backed Sector (Cost $38,158,057).................... 38,544,891
------------
Total Investments, at Value (Cost $298,494,029).................... 99.5% 294,204,320
Other Assets Net of Liabilities.................................... 0.5 1,453,809
------ ------------
Net Assets......................................................... 100.0% $295,658,129
====== ============
</TABLE>
(1) Face amount is reported in foreign currency. Currency abbreviations are as
follows:
<TABLE>
<S> <C> <C>
ARA -- Argentine Austral
AUD -- Australian Dollar
CAD -- Canadian Dollar
CLP -- Chilean Peso
DKK -- Danish Krone
ESP -- Spanish Peseta
GBP -- British Pound
IDR -- Indonesian Rupiah
ITL -- Italian Lira
MXP -- Mexican Peso
NZD -- New Zealand Dollar
</TABLE>
(2) Non-Income producing security.
(3) Represents a zero coupon bond that converts to a fixed rate of interest at a
designated date in the future.
(4) Represents the current interest rate for a variable rate security.
(5) Restricted security -- see Note 6 of Notes to Financial Statements.
(6) Interest or dividend is paid in kind.
(7) When-issued security to be delivered and settled after October 31, 1994.
(8) Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed-income
securities increase in price when interest rates decline. The principal
amount of the underlying pool represents the notional amount on which
current interest is calculated. The price of these securities is typically
more sensitive to changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA pass-throughs).
(9) Indexed instrument for which the principal amount due at maturity is
affected by the relative value of a foreign currency.
See accompanying Notes to Financial Statements.
12
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES October 31, 1994
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at value (cost $298,494,029) -- see accompanying statement................. $294,204,320
Cash.................................................................................... 2,237,788
Receivables:
Investments sold...................................................................... 2,793,040
Interest and dividends................................................................ 7,511,808
Other................................................................................... 213,820
------------
Total assets........................................................................ 306,960,776
------------
LIABILITIES:
Payables and other liabilities:
Investments purchased................................................................. 10,077,634
Currency payable...................................................................... 664,138
Dividend payable...................................................................... 245,882
Management and administrative fees -- Note 5.......................................... 92,320
Other................................................................................. 222,673
------------
Total liabilities................................................................... 11,302,647
------------
NET ASSETS.............................................................................. $295,658,129
============
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest.............................................. $ 290,648
Additional paid-in capital.............................................................. 318,777,657
Overdistributed net investment income................................................... (3,324,611)
Accumulated net realized loss from investment, written option and foreign currency
transactions.......................................................................... (15,862,506)
Net unrealized depreciation on investments and translation of assets and liabilities
denominated in foreign currencies..................................................... (4,223,059)
------------
NET ASSETS -- Applicable to 29,064,849 shares of beneficial interest outstanding........ $295,658,129
============
NET ASSET VALUE PER SHARE............................................................... $10.17
======
</TABLE>
See accompanying Notes to Financial Statements.
13
<PAGE> 14
STATEMENT OF OPERATIONS For the Year Ended October 31, 1994
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest (net of withholding tax of $234,664)........................................... $ 30,828,264
Dividends............................................................................... 410,652
------------
Total income................................................................... 31,238,916
------------
EXPENSES:
Management fees -- Note 5............................................................... 1,995,015
Administrative fees -- Note 5........................................................... 613,851
Custodian fees and expenses............................................................. 158,933
Shareholder reports..................................................................... 93,870
Transfer agent and accounting services fees -- Note 5................................... 62,252
Trustees' fees and expenses............................................................. 49,963
Legal and auditing fees................................................................. 40,854
Registration and filing fees............................................................ 30,377
Other................................................................................... 70,449
------------
Total expenses................................................................. 3,115,564
------------
NET INVESTMENT INCOME................................................................... 28,123,352
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized loss from:
Investments........................................................................... (4,799,403)
Closing of option contracts written -- Note 4......................................... (473,712)
Foreign currency transactions......................................................... (2,420,098)
------------
Net realized loss.............................................................. (7,693,213)
------------
Net change in unrealized appreciation or depreciation on:
Investments and options written....................................................... (20,087,086)
Translation of assets and liabilities denominated in foreign currencies............... 5,018,614
------------
Net change..................................................................... (15,068,472)
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN CURRENCY
TRANSACTIONS.......................................................................... (22,761,685)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $ 5,361,667
============
</TABLE>
See accompanying Notes to Financial Statements.
14
<PAGE> 15
STATEMENTS OF CHANGES IN NET ASSETS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
1994 1993
------------ ---------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................. $ 28,123,352 $ 31,130,734
Net realized gain (loss) on investments, options written and foreign
currency transactions................................................ (7,693,213) 3,643,426
Net change in unrealized appreciation or depreciation on investments,
options written and translation of assets and liabilities denominated
in foreign currencies................................................ (15,068,472) 8,632,776
------------ ---------------
Net increase in net assets resulting from operations............... 5,361,667 43,406,936
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($.845 and $1.01 per share,
respectively)........................................................ (24,512,388) (29,034,475)
Tax return of capital distribution ($.126 per share)................... (3,638,975) --
BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares issued to shareholders in reinvestment of
dividends -- Note 2.................................................. 1,801,323 2,906,011
------------ ---------------
Total increase (decrease) in net assets ........................... (20,988,373) 17,278,472
NET ASSETS:
Beginning of year...................................................... 316,646,502 299,368,030
------------ ---------------
End of year (including undistributed (overdistributed) net investment
income of $(3,324,611) and $2,722,769, respectively)................. $295,658,129 $316,646,502
============ ===============
</TABLE>
See accompanying Notes to Financial Statements.
15
<PAGE> 16
FINANCIAL HIGHLIGHTS
Oppenheimer Multi-Sector Income Trust
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988(1)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period...... $ 10.96 $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17 $ 11.16
-------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income.................... 1.00 1.08 1.06 1.11 1.15 1.12 .64
Net realized and unrealized gain (loss)
on investments, options written and
foreign currency transactions.......... (.82) .43 (.08) .82 (.78) (.52) .05
-------- -------- -------- -------- -------- -------- --------
Total income from investment
operations........................... .18 1.51 .98 1.93 .37 .60 .69
-------- -------- -------- -------- -------- -------- --------
Dividends and distributions to
shareholders:
Dividends from net investment income..... (.84) (1.01) (1.16) (1.07) (1.10) (1.13) (.59)
Distributions from net realized gain on
investments, options written and
foreign currency transactions.......... -- -- -- (.10) (.02) (.01) (.06)
Tax return of capital.................... (.13) -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total dividends and distributions to
shareholders......................... (.97) (1.01) (1.16) (1.17) (1.12) (1.14) (.65)
Offering costs........................... -- -- -- -- -- -- (.03)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period............ $ 10.17 $ 10.96 $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17
======== ======== ======== ========
======== ======== ========
Market value, end of period............... $ 9.50 $ 11.25 $ 11.13 $ 11.13 $ 9.38 $ 10.13 $ 11.50
TOTAL RETURN, AT MARKET VALUE(2).......... (7.46)% 11.10% 11.48% 33.05% 4.09%
(1.86)% 6.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................... $295,658 $316,647 $299,368 $301,568 $278,511 $299,673 $314,656
Average net assets (in thousands)......... $306,686 $307,244 $303,773 $289,681 $290,533 $307,735 $311,254
Number of shares outstanding at end of
period (in thousands).................... 29,065 28,896 28,625 28,347 28,194 28,194 28,162
Ratios to average net assets:
Net investment income.................... 9.17% 10.13% 9.95% 10.80% 11.16% 10.28%
9.80%(3)
Expenses................................. 1.02% 1.00% 1.11% 1.16%(4) 1.03% 1.03% 1.01%(3)
Portfolio turnover rate(5)................ 187.6% 131.3% 95.9% 59.7% 85.7% 162.0% 60.1%
</TABLE>
(1) For the period from March 24, 1988 (commencement of operations) to October
31, 1988.
(2) Assumes a hypothetical purchase at the current market price on the business
day before the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date, and
a sale at the current market price on the last business day of the period.
Total return does not reflect sales charges or brokerage commissions.
(3) Annualized.
(4) Includes $.01 per share of federal excise tax expense. The expense ratio,
exclusive of federal excise tax expense, was 1.10%.
(5) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the year ended October 31, 1994 were $552,455,453
and $528,484,242, respectively.
See accompanying Notes to Financial Statements.
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
Oppenheimer Multi-Sector Income Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Trust's investment advisor is Oppenheimer
Management Corporation (the Manager). The following is a summary of significant
accounting policies consistently followed by the Trust.
Investment Valuation -- Portfolio securities are valued at 4:00 p.m. (New York
time) on the last day of each week on which day the New York Stock Exchange is
open. Listed and unlisted securities for which such information is regularly
reported are valued at the last sale price of the day or, in the absence of
sales, at values based on the closing bid or asked price or the last sale price
on the prior trading day. Long-term debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Long-term debt securities
which cannot be valued by the approved portfolio pricing service are valued
using dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or under consistently applied procedures established by the Board of
Trustees to determine fair value in good faith. Short-term debt securities
having a remaining maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to maturity of any premium or
discount. Forward foreign currency contracts are valued at the closing price on
the London foreign exchange market on a daily basis. Options are valued based
upon the last sale price on the principal exchange on which the option is traded
or, in the absence of any transactions that day, the value is based upon the
last sale on the prior trading date if it is within the spread between the
closing bid and asked prices. If the last sale price is outside the spread, the
closing bid or asked price closest to the last reported sale price is used.
Security Credit Risk -- The Trust invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Trust
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. At October 31, 1994, securities with an
aggregate market value of $1,452,000, representing .47% of the Trust's total
assets, were in default.
Foreign Currency Translation -- The accounting records of the Trust are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of exchange.
Amounts related to the purchase and sale of securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The Trust generally enters into forward foreign currency exchange contracts as a
hedge, upon the purchase or sale of a security denominated in a foreign
currency. In addition, the Trust may enter into such contracts as a hedge
against changes in foreign currency exchange rates on portfolio positions. A
forward exchange contract is a commitment to purchase or sell a foreign currency
at a future date, at a negotiated rate. Risks may arise from the potential
inability of the counterparty to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Trust's results of operations.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
Call Options Written -- The Trust may write covered call options. When an option
is written, the Trust receives a premium and becomes obligated to sell the
underlying security at a fixed price, upon exercise of the option. In writing an
option, the Trust bears the market risk of an unfavorable change in the price of
the security underlying the written option. Exercise of an option written by the
Trust could result in the Trust selling a security at a price different from the
current market value. All securities covering call options written are held in
escrow by the custodian bank.
Repurchase Agreements -- The Trust requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. If the seller of the agreement defaults and the value of
the collateral declines, or if the seller enters an insolvency proceeding,
realization of the value of the collateral by the Trust may be delayed or
limited.
Federal Income Taxes -- The Trust intends to continue to comply with provisions
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income tax provision is required. At October 31, 1994, the Trust had
available for federal income tax purposes an unused capital loss carryover of
approximately $13,700,000, $6,700,000 of which will expire in 1998, $2,500,000
in 1999, and $4,500,000 in 2002.
Trustees' Fees and Expenses -- The Trust has adopted a nonfunded retirement plan
for the Trust's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. The accumulated liability
for the Trust's projected benefit obligations was $117,741 at October 31, 1994.
No payments have been made under the plan.
Distributions to Shareholders -- The Trust intends to declare and pay dividends
from net investment income monthly. Distributions from net realized gains on
investments, if any, will be made at least once each year.
Change in Accounting Classification of Distributions to
Shareholders -- Effective November 1, 1993, the Trust adopted Statement of
Position 93-2: Determination, Disclosure, and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distributions by Investment
Companies. As a result, the Trust changed the classification of distributions to
shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax regulations.
Accordingly, subsequent to October 31, 1993, amounts have been reclassified to
reflect a decrease in paid-in capital of $202,055, a decrease in undistributed
net investment income of $6,782,917, and a decrease in undistributed capital
loss on investments of $6,984,972. During the year ended October 31, 1994, in
accordance with Statement of Position 93-2, paid-in capital was decreased by
$3,880,475, undistributed net investment loss was decreased by $763,547 and
undistributed capital loss was decreased by $3,116,928.
Other -- Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes. Dividends in kind are recognized as income
on the ex-dividend date, at the current market value of the underlying security.
Interest on payment-in-kind debt instruments is accrued as
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
income at the coupon rate and a market adjustment is made on the ex-date.
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of $.01 par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended October Year Ended October
31, 1994 31, 1993
--------------------- ---------------------
Shares Amount Shares Amount
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Net increase from
dividends
reinvested........ 168,788 $1,801,323 271,391 $2,906,011
</TABLE>
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1994, net unrealized depreciation on investments and options
written of $4,289,709 was composed of gross appreciation of $4,685,873, and
gross depreciation of $8,975,582.
4. CALL OPTION ACTIVITY
Call option activity for the year ended October 31, 1994 was as follows:
<TABLE>
<CAPTION>
Number Amount
of Options of Premiums
---------- -----------
<S> <C> <C>
Options outstanding at
October 31, 1993................ -- --
Options written.................. 415 $ 416,379
Options closed................... (415) (416,379)
--- ---------
Options outstanding at
October 31, 1994................ -- --
=== =========
</TABLE>
The cost of cancelling options in closing purchase transactions was $890,091
resulting in a net short-term loss of $473,712.
5. MANAGEMENT AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for an annual fee of .65% on
the Trust's average annual net assets.
Mitchell Hutchins Asset Management Inc. serves as the Trust's Administrator. The
Trust pays the Administrator an annual fee of .20% of the Trust's average annual
net assets.
The Manager acts as the accounting agent for the Trust at an annual fee of
$24,000, plus out-of-pocket costs and expenses reasonably incurred.
Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary
of the Manager, is the transfer agent and registrar for the Trust. Fees paid to
SFSI are based on the number of accounts and the number of shareholder
transactions, plus out-of-pocket costs and expenses.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Sector Income Trust
6. RESTRICTED SECURITIES
The Trust owns securities purchased in private placement transactions,
without registration under the Securities Act of 1933 (the Act). The
securities are valued under methods approved by the Board of Trustees as
reflecting fair value. The Trust intends to invest no more than 10% of
its net assets (determined at the time of purchase) in restricted and
illiquid securities, excluding securities eligible for resale pursuant to
Rule 144A of the Act that are determined to be liquid by the Board of
Trustees or by the Manager under Board-approved guidelines. Restricted
and illiquid securities, excluding securities eligible for resale
pursuant to Rule 144A of the Act amount to $21,729,775 or 7.35% of the
Trust's net assets at October 31, 1994. Illiquid and/or restricted
securities, including those restricted securities eligible for resale
pursuant to Rule 144A of the Act are listed below.
<TABLE>
<CAPTION>
Valuation Per Unit as
Security Acquisition Date Cost Per Unit of October 31, 1994
--------------------------------------------------- ---------------- ------------- ---------------------
<S> <C> <C> <C>
Aftermarket Technology Corp., 12% Sr. Sub. Nts.,
8/1/04(1)......................................... 7/25/94 $100.41 $101.50
AMR Corp., $3.00 Cum. Cv. Depositary Shares, Series
A(1).............................................. 12/2/93-4/21/94 $ 50.57 $ 42.13
Argentina Local Market Securities Trust, Series
1994-II, 11.30%, 4/1/00(1)........................ 8/25/94 $100.00 $ 99.88
Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series
A, 11/15/00....................................... 11/18/93 $100.00 $ 84.50
Bayerische Landesbank, N.Y. Branch, Mexican Peso
Linked Confidence Nts., Girozentrale Branch,
35.50%, 12/30/94.................................. 9/26/94 $100.00 $ 98.00
Becker Gaming, Inc. Wts., Exp. 11/00............... 11/18/93 $ 2.00 $ 2.00
Capitol Queen & Casino, Inc., 12% Fst. Mtg. Nts.,
Series A, 11/15/00................................ 11/13/94 $ 87.50 $ 85.00
Ecuador (Republic of) Bonds, 0%, 12/29/49(1)....... 10/10/94 $ 60.50 $ 58.88
Foamex LP/JPS Automotive Corp., Units(1)........... 6/22/94 $ 51.39 $ 54.50
Lehman Brothers Holdings, Inc., 5.225% Standard &
Poor's 500 Index-Linked Nts., 12/8/94............. 3/30/94 $144.80 $105.33
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 5.934%, 1/1/09....................... 2/23/94-4/21/94 $ 70.44 $ 70.88
Tranche B, 5.938%, 1/1/04....................... 5/25/94 $ 80.00 $ 75.44
Purity Supreme, Inc. Wts., Exp 8/97................ 7/29/92 $ -- $ .02
Repackaged Argentina Domestic Securities Trust I,
14.75%, 9/1/02(1)................................. 9/19/94-10/19/94 $ 99.86 $ 94.75
Salomon Brothers, Inc., Standard & Poor's 500
Index-Linked Nts.:
5.3125%, 12/13/94............................... 10/7/94 $144.80 $109.00
5.625%, 1/12/95................................. 10/7/94 $155.40 $117.00
South African (Republic of) Loan Participation
Agreement, Electricity Supply Commission, 7.25%,
10/14/98.......................................... 9/26/94-9/30/94 $ 94.62 $ 94.50
Terex Corp. Rts., Exp. 7/96(1)..................... 6/29/94 $ 1.49 $ 1.25
Triangle Wire & Cable, Inc. Common Stock........... 1/13/92 $ 9.50 $ 9.00
United Mexican States:
Mexico UMS Combined Facility 3, Loan
Participation Agreement, 5.6875%, 3/20/00..... 10/25/94 $ 89.00 $ 88.00
New New Money Loan Participation Agreement,
Tranche A, 6.0625%, 3/25/05................... 1/13/94 $ 91.75 $ 81.81
Petacalco Topolobampo Trust, 8.125% Sr. Nts.,
12/15/03(1)................................... 8/22/94 $ 89.06 $ 84.00
Venezuela (Republic of) Debs., 6.75%, 9/20/95(1)... 4/7/94-5/20/94 $ 94.96 $ 95.38
</TABLE>
(1) Transferable under Rule 144A of the Act.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
1. Financial Statements.
(a) Statement of Investments - (See Part B, Statement of
Additional Information): filed herewith.
(b) Statement of Assets and Liabilities - (See Part B, Statement
of Additional Information): filed herewith.
(c) Statement of Operations - (See Part B, Statement of
Additional Information): filed herewith.
(d) Statements of Changes in Net Assets - (See Part B,
Statement of Additional Information): filed herewith.
(e) Financial Highlights - (See Part B, Statement of Additional
Information): filed herewith.
(f) Notes to Financial Statements - (See Part B, Statement of
Additional Information): filed herewith.
(g) Independent Auditors' Report - (See Part B, Statement of
Additional Information): filed herewith.
(h) Independent Auditors' Consent - (See Part B, Statement of
Additional Information): filed herewith.
2. Exhibits:
(a) (1) Declaration of Trust of Registrant (1)
(2) Amendment No. 1 dated as of March 10, 1988 to
Declaration of Trust of Registrant (2)
(3) Amendment No. 2 dated November 6, 1989 to Declaration
of Trust of Registrant: Filed herewith.
(b) By-Laws of Registrant (1) (amended by-laws)
(c) Inapplicable
(d) Specimen certificate for Shares of Beneficial Interest,
$.01 par value (2)
(e) Inapplicable
(f) Inapplicable
(g) (1) Investment Advisory Agreement with Oppenheimer
Management Corporation dated 10/22/90 - Filed with
Post-Effective Amendment No. 5 to Registrant's
Registration Statement dated 2/27/91 and refiled
herewith pursuant to Item 102 of Regulation S-T.
(2) Form of Administration Agreement with Mitchell
Hutchins Asset Management Inc. (2)
(h) Form of Underwriting Agreement (2)
__________________
(1) Filed with Registrant's Registration Statement, 2/2/88, and refiled
herewith pursuant to Item 102 of Regulation S-T.
(2) Filed with Amendment No. 2 to Registrant's Registration Statement,
3/24/88, and refiled herewith pursuant to Item 102 of Regulation S-T.
(i) Retirement Plan for Non-Interested Trustees (adopted by
Registrant on 6/7/90) - Filed with Post-Effective Amendment
No. 45 to the Registration Statement of Oppenheimer Special
Fund (Reg. No. 2-14586) dated 10/21/94, and incorporated
herein by reference.
(j) Co-Custody Agreement, dated 8/18/92 - Previously filed with
Post-Effective Amendment No. 7 to Registrant's
Registration Statement, and refiled herewith pursuant
to Item 102 of Regulation S-T.
(k) Accounting Service Agreement: Filed herewith.
(l) Inapplicable
(m) Inapplicable
(n) Inapplicable
(o) Inapplicable
(p) Inapplicable
(q) Inapplicable
(r) Financial Data Schedule - Filed herewith
Item 25. Marketing Arrangements.
Inapplicable.
Item 26. Other Expenses of Issuance and Distribution.
Inapplicable.
Item 27. Persons Controlled by or under Common Control.
None.
Item 28. Number of Holders of Securities.
(1) (2)
Number of Record Holders
Title of Class at February 15, 1995
-------------- ------------------------
Shares of Beneficial Interest, 5,727
$.01 par value
Item 29. Indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer, or controlling person of the Registrant in
connection with the successful defense of any action, suit or proceeding)
is asserted against the Registrant by such trustee, officer or controlling
person, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act, and will be governed by
the final adjudication of such issue.
The Registrant hereby undertakes that it will apply the
indemnification provision of its By-laws in a manner consistent with
Release 11330 of the Securities and Exchange Commission under the
Investment Company Act of 1940, so long as the interpretation therein of
Sections 17(h) and 17(i) of the Investment Company Act remains in effect.
Registrant, in conjunction with the Registrant's Trustees,
and other registered management investment companies managed by the
Adviser, generally maintains insurance on behalf of any person who is or
was a Trustee, officer, employee, or agent of Registrant. However, in no
event will Registrant pay that portion of the premium, if any, for
insurance to indemnify any such person for any act for which Registrant
itself is not permitted to indemnify him.
Item 30. Business and Other Connections of Investment Adviser.
(a) Oppenheimer Management Corporation is the investment
adviser of the Registrant; it and certain subsidiaries and affiliates act
in the same capacity to other registered investment companies as described
in Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial nature in
which each officer and director of Oppenheimer Management Corporation is,
or at any time during the past two fiscal years has been, engaged for
his/her own account or in the capacity of director, officer, employee,
partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position
with Oppenheimer Other Business and Connections
Management Corporation During the Past Two Years
- ----------------------- ------------------------------
<S> <C>
Lawrence Apolito, None.
Vice President
James C. Ayer, Jr., Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Gold & Special Minerals Fund and
Oppenheimer Global Emerging Growth Fund.
Victor Babin, None.
Senior Vice President
Robert J. Bishop Assistant Treasurer of the OppenheimerFunds
Assistant Vice President (listed below); previously a Fund Controller
for Oppenheimer Management Corporation (the
"Adviser").
George Bowen Treasurer of the New York-based
Senior Vice President OppenheimerFunds; Vice President, Secretary
and Treasurer and Treasurer of the Denver-based
OppenheimerFunds. Vice President and
Treasurer of Oppenheimer Funds Distributor,
Inc. (the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment adviser
subsidiary of OMC; Senior Vice President,
Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an investment
adviser subsidiary of the Adviser; Vice
President, Treasurer and Secretary of
Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of
OMC; President, Treasurer and Director of
Centennial Capital Corporation; Vice
President and Treasurer of Main Street
Advisers; formerly Senior Vice President/
Comptroller and Secretary of Oppenheimer
Asset Management Corporation ("OAMC"), an
investment adviser which was a subsidiary of
the OMC.
Michael A. Carbuto, Vice President and Portfolio Manager of
Vice President Oppenheimer Tax-Exempt Cash Reserves,
Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice President
of Centennial.
William Colbourne, Formerly, Director of Alternative Staffing
Assistant Vice President Resources, and Vice President of Human
Resources, American Cancer Society.
Lynn Coluccy, Vice President Formerly Vice President/Director of Internal
Audit of the Adviser.
O. Leonard Darling, Formerly Co-Director of Fixed Income for
Executive Vice President State Street Research & Management Co.
Robert A. Densen, None.
Vice President
Robert Doll, Jr., Vice President and Portfolio Manager of
Executive Vice President Oppenheimer Growth Fund and Oppenheimer
Target Fund; Senior Vice President and
Portfolio Manager of Strategic Income &
Growth Fund.
John Doney, Vice President Vice President and Portfolio Manager of
Oppenheimer Equity Income Fund.
Andrew J. Donohue, Secretary of the New York-based
Executive Vice President OppenheimerFunds; Vice President of the
& General Counsel Denver-based OppenheimerFunds; Executive
Vice President, Director and General Counsel
of the Distributor; formerly Senior Vice
President and Associate General Counsel of
the Adviser and the Distributor.
Kenneth C. Eich, Treasurer of Oppenheimer Acquisition
Executive Vice President/ Corporation
Chief Financial Officer
George Evans, Vice President Vice President and Portfolio Manager of
Oppenheimer Global Securities Fund.
Scott Farrar, Assistant Treasurer of the OppenheimerFunds;
Assistant Vice President previously a Fund Controller for the
Adviser.
Katherine P.Feld Vice President and Secretary of Oppenheimer
Vice President and Funds Distributor, Inc.; Secretary of
Secretary HarbourView, Main Street Advisers, Inc. and
Centennial; Secretary, Vice President and
Director of Centennial Capital Corp.
Jon S. Fossel, President and director of Oppenheimer
Chairman of the Board, Acquisition Corp. ("OAC"), the Adviser's
Chief Executive Officer parent holding company; President, CEO and
and Director a director of HarbourView; a director of SSI
and SFSI; President, Director, Trustee, and
Managing General Partner of the Denver-based
OppenheimerFunds; formerly President of the
Adviser. President and Chairman of the Board
of Main Street Advisers, Inc.
Robert G. Galli, Trustee of the New York-based
Vice Chairman OppenheimerFunds; Vice President and Counsel
of OAC; formerly he held the following
positions: a director of the Distributor,
Vice President and a director of HarbourView
and Centennial, a director of SFSI and SSI,
an officer of other OppenheimerFunds and
Executive Vice President & General Counsel
of the Adviser and the Distributor.
Linda Gardner, None.
Assistant Vice President
Ginger Gonzalez, Formerly 1st Vice President/Director of
Vice President Creative Services for Shearson Lehman
Brothers.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht, Vice President and Portfolio Manager of
Vice President Oppenheimer Insured Tax-Exempt Bond Fund and
Oppenheimer Intermediate Tax Exempt Bond
Fund; an officer of other OppenheimerFunds;
formerly Vice President of Fixed Income
Portfolio Management at Bankers Trust.
Barbara Hennigar, President and Director of Shareholder
President and Chief Financial Service, Inc.
Executive Officer of
Oppenheimer Shareholder
Services, a division of OMC.
Alan Hoden, Vice President None.
Merryl Hoffman, None.
Vice President
Scott T. Huebl, None.
Assistant Vice President
Jane Ingalls, Formerly a Senior Associate with Robinson,
Assistant Vice President Lake/Sawyer Miller.
Stephen Jobe, None.
Vice President
Avram Kornberg, Formerly a Vice President with Bankers
Vice President Trust.
Paul LaRocco, Portfolio Manager of Oppenheimer Capital
Assistant Vice President Appreciation Fund; Associate Portfolio
Manager of Oppenheimer Discovery Fund and
Oppenheimer Time Fund. Formerly a
Securities Analyst for Columbus Circle
Investors.
Mitchell J. Lindauer, None.
Vice President
Loretta McCarthy, None.
Senior Vice President
Bridget Macaskill, Director of HarbourView; Director of Main
President and Director Street Advisers, Inc.; and Chairman of
Shareholder Services, Inc.
Sally Marzouk, None.
Vice President
Denis R. Molleur, None.
Vice President
Kenneth Nadler, None.
Vice President
David Negri, Vice President and Portfolio Manager of
Vice President Oppenheimer Strategic Bond Fund, Oppenheimer
Multiple Strategies Fund, Oppenheimer
Strategic Investment Grade Bond Fund,
Oppenheimer Asset Allocation Fund,
Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Short-Term Income
Fund, Oppenheimer High Income Fund and
Oppenheimer Bond Fund; an officer of other
OppenheimerFunds.
Barbara Niederbrach, None.
Assistant Vice President
Stuart Novek, Formerly a Director Account Supervisor for
Vice President J. Walter Thompson.
Robert A. Nowaczyk, None.
Vice President
Julia O'Neal, None.
Assistant Vice President
Robert E. Patterson, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Main Street California Tax-
Exempt Fund, Oppenheimer Insured Tax-Exempt
Bond Fund, Oppenheimer Intermediate Tax-
Exempt Bond Fund, Oppenheimer Florida Tax-
Exempt Fund, Oppenheimer New Jersey Tax-
Exempt Fund, Oppenheimer Pennsylvania Tax-
Exempt Fund, Oppenheimer California Tax-
Exempt Fund, Oppenheimer New York Tax-Exempt
Fund and Oppenheimer Tax-Free Bond Fund;
Vice President of the New York Tax-Exempt
Income Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust.
Tilghman G. Pitts III, Chairman and Director of the Distributor.
Executive Vice President
and Director
Jane Putnam, Associate Portfolio Manager of Oppenheimer
Assistant Vice President Growth Fund and Oppenheimer Target Fund and
Portfolio Manager for Oppenheimer Variable
Account Funds-Growth Fund; Senior Investment
Officer and Portfolio Manager with Chemical
Bank.
Russell Read, Formerly an International Finance Consultant
Assistant Vice President for Dow Chemical.
Thomas Reedy, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust; an officer of other
OppenheimerFunds; formerly a Securities
Analyst for the Manager.
David Rosenberg, Vice President and Portfolio Manager of
Vice President Oppenheimer Limited-Term Government Fund and
Oppenheimer U.S. Government Trust. Formerly
Vice President and Senior Portfolio Manager
for Delaware Investment Advisors.
Richard H. Rubinstein, Vice President and Portfolio Manager of
Vice President Oppenheimer Asset Allocation Fund,
Oppenheimer Fund and Oppenheimer Multiple
Strategies Fund; an officer of other
OppenheimerFunds; formerly Vice President
and Portfolio Manager/Security Analyst for
Oppenheimer Capital Corp., an investment
adviser.
Lawrence Rudnick, Formerly Vice President of Dollar Dry Dock
Assistant Vice President Bank.
Ellen Schoenfeld, None.
Assistant Vice President
Nancy Sperte, None.
Senior Vice President
Donald W. Spiro, President and Trustee of the New York-based
Chairman Emeritus OppenheimerFunds; formerly Chairman of the
and Director Adviser and the Distributor.
Arthur Steinmetz, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Investment Grade Bond
Fund, Oppenheimer Strategic Short-Term
Income Fund; an officer of other
OppenheimerFunds.
Ralph Stellmacher, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Champion High Yield Fund and
Oppenheimer High Yield Fund; an officer of
other OppenheimerFunds.
John Stoma, Vice President Formerly Vice President of Pension Marketing
with Manulife Financial.
James C. Swain, Chairman, CEO and Trustee, Director or
Vice Chairman of the Managing Partner of the Denver-based
Board of Directors OppenheimerFunds; President and a Director
and Director of Centennial; formerly President and
Director of OAMC, and Chairman of the Board
of SSI.
James Tobin, Vice President None.
Jay Tracey, Vice President Vice President of the Adviser; Vice
President and Portfolio Manager of
Oppenheimer Time Fund and Oppenheimer
Discovery Fund. Formerly Managing Director
of Buckingham Capital Management.
Gary Tyc, Vice President, Assistant Treasurer of the Distributor and
Assistant Secretary SFSI.
and Assistant Treasurer
Ashwin Vasan, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust: an officer of other
OppenheimerFunds.
Valerie Victorson, None.
Vice President
John Wallace, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, and
Oppenheimer Main Street Income and Growth
Fund; an officer of other OppenheimerFunds;
formerly a Securities Analyst and Assistant
Portfolio Manager for the Adviser.
Dorothy Warmack, Vice President and Portfolio Manager of
Vice President Daily Cash Accumulation Fund, Inc.,
Oppenheimer Cash Reserves, Centennial
America Fund, L.P., Centennial Government
Trust and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells, None.
Vice President
William L. Wilby, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Global Fund and Oppenheimer
Global Growth & Income Fund; Vice President
of HarbourView; an officer of other
OppenheimerFunds.
Carol Wolf, Vice President and Portfolio Manager of
Vice President Oppenheimer Money Market Fund, Inc.,
Centennial America Fund, L.P., Centennial
Government Trust, Centennial Money Market
Trust and Daily Cash Accumulation Fund,
Inc.; Vice President of Oppenheimer Multi-
Sector Income Trust; Vice President of
Centennial.
Robert G. Zack, Associate General Counsel of the Adviser;
Senior Vice President Assistant Secretary of the OppenheimerFunds;
and Assistant Secretary Assistant Secretary of SSI, SFSI; an officer
of other OppenheimerFunds.
Eva A. Zeff, Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Mortgage Income Fund; an officer
of other OppenheimerFunds; formerly a
Securities Analyst for the Adviser.
Arthur J. Zimmer, Vice President and Portfolio Manager of
Vice President Centennial America Fund, L.P., Oppenheimer
Money Fund, Centennial Government Trust,
Centennial Money Market Trust and Daily Cash
Accumulation Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust; Vice
President of Centennial; an officer of other
OppenheimerFunds.
</TABLE>
The OppenheimerFunds include the New York-based OppenheimerFunds
and the Denver-based OppenheimerFunds set forth below:
New York-based OppenheimerFunds
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Mortgage Income Fund
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Trust
Oppenheimer Fund
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer Time Fund
Oppenheimer U.S. Government Trust
Denver-based OppenheimerFunds
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion High Yield Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Tax-Exempt Bond Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
The address of Oppenheimer Management Corporation, the New York-
based OppenheimerFunds, Oppenheimer Funds Distributor, Inc., Harbourview
Asset Management Corp., Oppenheimer Partnership Holdings, Inc., and
Oppenheimer Acquisition Corp. is Two World Trade Center, New York, New
York 10048-0203.
The address of the Denver-based OppenheimerFunds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., Oppenheimer
Shareholder Services, Centennial Asset Management Corporation, Centennial
Capital Corp., and Main Street Advisers, Inc. is 3410 South Galena Street,
Denver, Colorado 80231.
Item 31. Location of Accounts and Records.
All accounts, books and other documents, required to be
maintained by the Registrant under Section 31(a) of the Investment Company
Act of 1940 and the Rule thereunder are maintained by Oppenheimer
Management Corporation at its offices at 3410 South Galena Street, Denver,
Colorado 80231.
Item 32. Management Services.
The Registrant is not a party to any management-related
service contract not discussed in Part A of this Registration Statement.
Item 33. Undertakings.
1. The Registrant undertakes to suspend the offering of
the shares covered hereby until it amends its prospectus if (1) subsequent
to the effective date of this Registration Statement, its net asset value
per share declines more than 10 percent from its net asset value per share
as of the effective date of this Registration Statement, or (2) its net
asset value increases to an amount greater than its net proceeds as stated
in the prospectus.
2. Inapplicable
3. Inapplicable
4. Inapplicable
5. Inapplicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York
on the 24th day of February, 1995.
OPPENHEIMER MULTI-SECTOR INCOME TRUST
By: /s/ Donald W. Spiro*
----------------------------------------
Donald W. Spiro, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Leon Levy* Chairman of the
- -------------- Board of Trustees February 24, 1995
Leon Levy
/s/ Donald W. Spiro* President, Principal
- -------------------- Executive Officer
Donald W. Spiro and Trustee February 24, 1995
/s/ George Bowen* Treasurer and
- ----------------- Principal Financial
George Bowen and Accounting
Officer February 24, 1995
/s/ Leo Cherne * Trustee February 24, 1995
- ---------------
Leo Cherne
/s/ Robert G. Galli* Trustee February 24, 1995
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee February 24, 1995
- ----------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee February 24, 1995
- --------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall * Trustee February 24, 1995
- -----------------------
Kenneth A. Randall
/s/ Edward V. Regan * Trustee February 24, 1995
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee February 24, 1995
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Sidney M. Robbins * Trustee February 24, 1995
- ----------------------
Sidney M. Robbins
/s/ Pauline Trigere * Trustee February 24, 1995
- --------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee February 24, 1995
- -----------------------
Clayton K. Yeutter
* By /s/ Robert G. Zack
--------------------
Robert G. Zack, Attorney-In-Fact
<PAGE>
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Registration No. 811-5473
Post-Effective Amendment No. 8
Index to Exhibits
Exhibit No. Description
- ----------- -----------
24(1)(h) Independent Auditor's Consent
24(2)(a)(1) Declaration of Trust of Registrant
24(2)(a)(2) Amendment No. 1 dated as of March 10, 1988
to Declaration of Trust of Registrant
24(2)(a)(3) Amendment No. 2 dated November 6, 1989 to Declaration
of Trust of Registrant
24(2)(b)(1) By-Laws (as amended) of Registrant
24(2)(b)(1) Amendment No. 1 to By-Laws
24(2)(d) Specimen Share Certificate
24(2)(g)(1) Investment Advisory Agreement with Oppenheimer
Management Corporation dated 10/22/90
24(2)(g)(2) Form of Administration Agreement with Mitchell
Hutchins Asset Management Inc.
24(2)(h) Underwriting Agreement
24(2)(j) Co-Custody Agreement
24(2)(k) Accounting Services Agreement
24(2)(r) Financial Data Schedule
-- Powers of Attorney
Independent Auditors' Consent
The Board of Trustees
Oppenheimer Multi-Sector Income Trust:
We consent to the use of our report dated November 21, 1994 included
herein.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Denver, Colorado
February 23, 1995
DECLARATION OF TRUST OF OPPENHEIMER MULTI-SECTOR INCOME TRUST
Dated: February 22, 1988
_____________________________________ THE DECLARATION OF TRUST of
Oppenheimer Multi-Sector Income Trust is made the 22nd day of February,
1988 by the parties signatory hereto, as trustees (such persons, so long
as they shall continue in office in accor-dance with the terms of this
Declaration of Trust, and all other persons who at the time in question
have been duly elected or appointed as trustees in accordance with the
provisions of this Declaration of Trust and are then in office, being
hereinafter called the "Trustees").
W I T N E S S E T H: WHEREAS, the Trustees desire to form a trust
fund under the laws of Massachusetts for the investment and reinvestment
of funds contributed thereto; and
WHEREAS, it is provided that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest as
herein-after provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust, all money and property contributed to the trust fund to manage and
dispose of the same for the benefit of the holders from time to time of
the shares of beneficial interest issued hereunder and subject to the
provisions hereof, to wit:
ARTICLE I
NAME AND DEFINITIONS Section 1.1. Name. The name of the trust
created hereby is the "Oppenheimer Multi-Sector Income Trust," and so far
as may be practicable the Trustees shall conduct the Trust's activities,
execute all documents and sue or be sued under that name, which name (and
the word "Trust" wherever herein used) shall refer to the Trustees as
trustees, and not as individ-uals, or personally, and shall not refer to
the officers, agents, employees or Shareholders of the Trust. Should the
Trustees determine that the use of such name is not advisable, they may
use such other name for the Trust as they deem proper and the Trust may
hold its property and conduct its activi- ties under such other name.
Section 1.2. Definitions. Wherever they are used herein, the
follow- ing terms have the following respective meanings:
(a) "By-Laws" means the By-Laws referred to in Section 3.9
hereof, as from time to time amended.
(b) the terms "Commission," "Affiliated Person" and
"Interested Person," have the meanings given them in the 1940 Act.
(c) "Declaration" means this Declaration of Trust as amended
from time to time. Reference in this Declaration of Trust to
"Declaration," "hereof," "herein" and "hereunder" shall be deemed to refer
to this Declaration rather than the article or section in which such words
appear.
(d) "Distributor" means the party, other than the Trust, to
a contract described in Section 4.3 hereof.
(e) "Fundamental Policies" shall mean the investment policies
and restrictions set forth in the Registration Statement and designated
as fundamental policies therein.
(f) "Investment Adviser" means any party, other than the
Trust, to a contract described in Section 4.1 hereof.
(g) "Majority Shareholder Vote" means the vote of the holders
of a majority of Shares, which shall consist of: (i) a majority of Shares
presented in person or by proxy and entitled to vote at a meeting of
Shareholders at which a quorum, as determined in accordance with the By-
Laws, is present or (ii) a majority of Shares issued and outstanding
and entitled to vote when action is taken by written consent of Share-
holders, unless the action requires the approval of a "majority of the
outstanding voting securities" under the 1940 Act, in which case such
vote as specified in the 1940 Act shall be required.
(h) "1940 Act" means the Investment Company Act of 1940 and
the rules and regulations thereunder as amended from time to time.
(i) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities,
whether or not legal entities, and governments and agencies and
political subdivisions thereof.
(j) "Registration Statement" means the Registration Statement
of the Trust under the Securities Act of 1933 as such Registration State-
ment may be amended and filed with the Commission from time to time.
(k) "Shareholder" means a record owner of outstanding Shares.
(l) "Shares" means the units of interest into which the
beneficial interest in the Trust shall be divided from time to time and
includes fractions of Shares as well as whole Shares.
(m) "Transfer Agent" means the party, other than the Trust,
to the contract described in Section 4.4 hereof.
(n) "Trust" means the Oppenheimer Multi-Sector Income Trust.
(o) "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the
account of the Trust or the Trustees.
(p) "Trustees" means the persons who have signed the
Declaration, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
elected or appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and reference herein to a Trustee or the Trustees
shall refer to such person or persons in their capacity as trustees
hereunder.
ARTICLE II
TRUSTEES Section 2.1. Number of Trustees. The number of Trustees
shall be such number as shall be fixed from time to time by a written
instrument signed by a majority of the Trustees, provided, however, that
the number of Trustees shall in no event be less than three (3) nor more
than fifteen (15). No reduction in the number of Trustees shall have the
effect of removing any Trustee from office prior to the expiration of his
term unless the Trustee is specifically removed pursuant to Section 2.2
of this Article II at the time of decrease.
Section 2.2. Term of Office of Trustees. The Board of Trustees
shall be divided into four classes. Within the limits above specified,
the number of the Trustees in each class shall be determined by resolution
of the Board of Trustees. The term of office of all of the Trustees shall
expire on the date of the first annual or special meeting of shareholders
following the effective date of the Registration Statement relating to the
Shares under the Securi- ties Act of 1933, as amended. The term of office
of the first class shall expire on the date of the second annual meeting
of shareholders or special meeting in lieu thereof. The term of office
of the second class shall expire on the date of the third annual meeting
of shareholders or special meeting in lieu therof. The term of office of
the third class shall expire on the date of the fourth annual meeting of
shareholders or special meeting in lieu thereof. The term of office of
the fourth class shall expire on the date of the fifth annual meeting of
shareholders or special meeting in lieu thereof. Upon expiration of the
term of office of each class as set forth above, the number of Trustees
in such class, as determined by the Board of Trustees, shall be elected
for a term expiring on the date of the fourth annual meet-ing of
shareholders or special meeting in lieu thereof following such expir-ation
to succeed the Trustees whose terms of office expire. The Trustees shall
be elected at an annual meeting of the shareholders or special meeting in
lieu thereof called for that purpose, except as provided in Section 2.3
of this Article and each Trustee elected shall hold office until his
succes-sor shall have been elected and shall have qualified; except (a)
that any Trustee may resign his trust (without need for prior or
subsequent account-ing) by an instrument in writing signed by him or her
and delivered to the other Trustees, which shall take effect upon such
delivery or upon such later date as is specified therein; (b) that any
Trustee may be removed (provided the aggregate number of Trustees after
such removal shall not be less than the number required by Section 2.1
hereof) with cause, at any time by writ-ten instrument, signed by the
remaining Trustees, specifying the date when such removal shall become
effective; and (c) that any Trustee who requests in writing to be retired
or who has become incapacitated by illness or injury may be retired by
written instrument signed by a majority of the other Trustees, specifying
date of his retirement. Upon the resignation or removal of a Trustee,
or his otherwise ceasing to be Trustee, he shall execute and deliver such
documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust property held
in the name of the resigning or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver
on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.
Section 2.3. Resignation and Appointment of Trustees. In case of
the declination, death, resignation, retirement, removal or inability of
any of the Trustees, or in case a vacancy shall, by reason of an increase
in number, or for any other reason, exist, the remaining Trustees or,
prior to the pub-lic offering of Shares of the Trust, if only one Trustee
shall then remain in office, the remaining Trustee, shall fill such
vacancy by appointing such other person as they or he, in their or his
discretion, shall see fit. Such appointment shall be evidenced by a
written instrument signed by a majority of the remaining Trustees or by
the remaining Trustee, as the case may be. Any such appointment shall not
become effective, however, until the person named in the written
instrument or appointment shall have accepted in writ- ing such
appointment and agreed in writing to be bound by the terms of the
Declaration. Within twelve months of such appointment, the Trustees shall
cause notice of such appointment to be mailed to each Shareholder at his
ad- dress as recorded on the books of the Trust. An appointment of a
Trustee may be made by the Trustees then in office and notice thereof
mailed to Shareholders as aforesaid in anticipation of a vacancy to occur
by reason of retirement, resignation or increase in number of Trustees
effective at a later date, provided that said appointment shall become
effective only at or after the effective date of said retirement,
resignation or increase in num-ber of Trustees. The power of appointment
is subject to the provisions of Section 16(a) of the 1940 Act.
Section 2.4. Vacancies. The death, declination, resignation,
retirement, removal or incapacity of the Trustees, or any one of them,
shall not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration. Whenever a vacancy in
the number of Trustees shall occur, until such vacancy is filled as
provided in Section 2.3, the Trustees in office, regardless of their
number, shall have all the duties imposed upon the Trustees by the
Declaration. A written instru-ment certifying the existence of such
vacancy signed by a majority of the Trustees shall be conclusive evidence
of the existence of such vacancy.
Section 2.5. Delegation of Power to Other Trustees. Subject to
the provisions of the 1940 Act, any Trustee may, by power of attorney,
delegate his power for a period not exceeding six (6) months at any one
time to any other Trustee or Trustees; provided that in no case shall less
than two (2) Trustees personally exercise the powers granted to the
Trustees under the Declaration except as herein otherwise expressly
provided.
ARTICLE III POWERS OF TRUSTEES Section 3.1.
General. The Trustees shall have exclusive and absolute control over the
Trust Property and over the business of the Trust to the same extent as
if the Trustees were the sole owners of the Trust Property and business
in their own right, but with such powers of delegation as may be permitted
by the Declaration. The Trustees shall have power to conduct the business
of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of
Massachusetts, in any and all states of the United States of America, in
the District of Columbia, and in any and all commonwealths, territories,
depen- dencies, colonies, possessions, agencies or instrumentalities
wheresoever in the world they may be located and to do all such other
things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such
things are not herein spe- cifically mentioned. Any determination as to
what is in the interests of the Trust made by the Trustees in good faith
shall be conclusive. In con-struing the provisions of the Declaration,
the presumption shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed
as limiting the aforesaid power. Such powers of the Trustees may be
exercised without order of or resort to any court.
Section 3.2. Investments. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute, lend or otherwise deal in or dispose of negotiable or
nonegotiable instruments, obligations, evidences of indebtedness,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, options, commodities, commodity
futures contracts and related options, currencies, currency futures and
forward contracts, and other securities, investment contracts and other
instruments of any kind, including, without limitation, those issued,
guaranteed or sponsored by any and all Persons including, without
limitation, states, territories and possessions of the United States, the
District of Columbia and any of the political subdivisions, agencies or
instrumentalities thereof, and by the United States Government or its
agencies or instrumentalities, foreign or international governments,
political subdivisions, agencies or instrumentalities, or by any bank
or savings institution, or by any corporation or organization organized
under the laws of the United States or of any state, territory or
possession thereof, and of corporations or organizations organized
under foreign laws, or in "when issued" contracts for any such
securities, or retain Trust assets in cash and from time to time change
the investments of the assets of the Trust; and to exercise any and all
rights, powers and privileges of ownership or interest in respect of
any and all such investments of every kind and description, including,
without limitation, the right to consent and otherwise act with respect
thereto, with power to designate one or more persons, firms,
associations or corporations to exercise any of said rights, powers and
privileges in respect of any of said instruments; and the Trustees
shall be deemed to have the foregoing powers with respect to any
additional securities in which the Trust may invest should the
Fundamental Policies be amended. The Trustees shall not be limited to
investing in obligations maturing be-fore the possible termination of the
Trust, nor shall the Trustees be limi-ted by any law limiting the
investments which may be made by fiduciaries.
Section 3.3. Legal Title. Legal title to all the Trust Property
shall be vested in the Trustees as joint tenants except that the Trustees
shall have power to cause legal title to any Trust Property to be held by
or in the name of one or more of the Trustees, or in the name of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine, provided that the interest of the Trust therein
is appropri-ately protected. The right, title and interest of the
Trustees in the Trust Property shall vest automatically in each Person who
may hereafter become a Trustee. Upon the resignation, removal or death
of a Trustee he shall auto- matically cease to have any right, title or
interest in any of the Trust Property, and the right, title and interest
of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered.
Section 3.4. Issuance and Repurchase of Securities. The Trustees
shall have the power to issue, sell, repurchase, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares
and, subject to the provisions set forth in Articles VII and VIII hereof,
to apply to any such repurchase, retirement, cancellation or acquisition
of Shares any funds or property of the Trust, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws
of the Commonwealth of Massachusetts governing business corporations.
Section 3.5. Borrowing Money; Lending Trust Assets. Subject to
the Fundamental Policies, the Trustees shall have power to borrow money
or otherwise obtain credit and to secure the same by mortgaging, pledging
or otherwise subjecting as security the assets of the Trust, to endorse,
guarantee, or undertake the performance of any obligation, contract or
engagement of any other Person and to lend Trust assets.
Section 3.6. Delegation; Committees. The Trustees shall have
power, consistent with their continuing exclusive authority over the
management of the Trust and the Trust Property, to delegate from time to
time to such of their number or to officers, employees or agents of the
Trust the doing of such things and the execution of such instruments
either in the name of the Trust or the names of the Trustees or otherwise
as the Trustees may deem expedient.
Section 3.7. Collection and Payment. The Trustees shall have
power to collect all property due to the Trust; to pay all claims,
including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations, by virtue of
which any property is owed to the Trust; and to enter into releases,
agreements and other instruments.
Section 3.8. Expenses. The Trustees shall have the power to
incur and pay any expenses which in the opinion of the Trustees are
necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the
Trust to themselves as Trustees. The Trustees shall fix the compensation
of all officers, em-ployees and Trustees.
Section 3.9 Manner of Acting; By-Laws. Except as otherwise
provided herein or in the By-Laws or by any provision of law, any action
to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum being present), including any
meeting held by means of a conference telephone circuit or similar
communications equipment by means of which all persons participating in
the meeting can hear each other, or by written consents of all the
Trustees. The Trustees may adopt By-Laws not inconsistent with this
Declaration to provide for the conduct of the business of the Trust and
may amend or repeal such By-Laws to the extent such power is not reserved
to the Shareholders.
Section 3.10 Miscellaneous Powers. The Trustees shall have the
power to: (a) employ or contract with such Persons as the Trustees may
deem desir-able for the transaction of the business of the Trust; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their
number, elect and remove such officers and appoint and terminate such
agents or employees as they consider appropriate, and appoint from their
own number, and terminate, any one or more committees which may exercise
some or all of the power and authority of the Trustees as the Trustees may
determine; (d) purchase, and pay for out of Trust Property, insurance
policies insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, distributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding
any such position or by reason of any action taken or omitted to be taken
by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify
such Person against such liability; (e) establish pen-sion, profit-
sharing, Share purchase, and other retirement, incentive and benefit plans
for any Trustees, officers, employees and agents of the Trust; (f) to the
extent permitted by law, indemnify any person with whom the Trust has
dealings, including any Investment Adviser, Distributor, Transfer Agent
and selected dealers, to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h) determine
and change the fiscal year of the Trust and the method by which its
accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument
executed on behalf of the Trust.
Section 3.11 Principal Transactions. Except in transactions
permit-ted by the 1940 Act or any rule or regulation thereunder, or any
order of exemption issued by the Commission, or effected to implement the
provisions of any agreement to which the Trust is a party, the Trustees
shall not, on behalf of the Trust, buy any securities (other than Shares)
from or sell any securities (other than Shares) to, or lend any assets of
the Trust to, any Trustee or officer of the Trust or any firm of which any
such Trustee or officer is a member acting as principal, or have any such
dealings with any Investment Adviser, Distributor or Transfer Agent or
with any Affiliated Person of such Person; but the Trust or any Series
thereof may employ any such Person, or firm or company in which such
Person is an Interested Per- son, as broker, legal counsel, registrar,
transfer agent, dividend disburs-ing agent or custodian upon customary
terms.
Section 3.12 Litigation. The Trustees shall have the power to
engage in and to prosecute, defend, compromise, abandon, or adjust, by
arbitration or otherwise, any actions, suits, proceedings, disputes,
claims, and demands relating to the Trust, and out of the assets of the
Trust to pay or to sat- isfy any debts, claims or expenses incurred in
connection therewith, includ- ing those of litigation, and such power
shall include without limitation the power of the Trustees or any
appropriate committee thereof, in the exercise of their or its good faith
business judgment, to dismiss any action, suit, proceeding, dispute,
claim, or demand, derivative or otherwise, brought by any person,
including a Shareholder in its own name or the name of the Trust, whether
or not the Trust or any of the Trustees may be named individ-ually therein
or the subject matter arises by reason of business for or on behalf of the
Trust.
Section 3.13 Trustees and Officers as Shareholders. No officer
or Trustee of the Trust, and no officer or director of the Investment
Adviser or the Distributor, and no Investment Adviser or Distributor of
the Trust, shall take a short position in the securities issued by the
Trust.
ARTICLE IV INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND
TRANSFER AGENT
Section 4.1. Investment Adviser. Subject to approval by a
Majority Shareholder Vote, the Trustees may in their discretion from time
to time enter into one or more investment advisory or management contracts
whereby the other party or parties to any such contracts shall undertake
to furnish the Trust such management, investment advisory, administration,
accounting, legal, statistical and research facilities and services,
promotional or marketing activities, and such other facilities and
services, if any, as the Trustees shall from time to time consider
desirable and all upon such terms and conditions as the Trustees may in
their discretion determine. Notwith- standing any provisions of the
Declaration, the Trustees may authorize the Investment Advisers, or any
of them, under any such contracts (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect
purchases, sales, loans or exchanges or portfolio securi-ties and other
investments of the Trust on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or
exchanges pursuant to recommendations of such Investment Advisers, or any
of them (and all without further action by the Trustees). Any such
purchases, sale, loans and exchanges shall be deemed to have been
authorized by all of the Trustees.
Section 4.2. Administrative Services. The Trustees may in their
dis- cretion from time to time contract for administrative personnel and
services whereby the other party shall agree to provide the Trustees or
the Trust ad- ministrative personnel and services to operate the Trust on
a daily or other basis, on such terms and conditions as the Trustees may
in their discretion determine. Such services may be provided by one or
more persons or entities.
Section 4.3. Distributor. The Trustees may in their discretion
from time to time enter into one or more contracts, providing for the sale
of Shares whereby the Trust may either agree to sell the Shares to the
other parties to the contracts, or any of them, or appoint any such other
party its sales agent for such Shares. In either case, any such contract
shall be on such terms and conditions as the Trustees may in their
discretion deter-mine not inconsistent with the provisions of this Article
IV or the By-Laws, including, without limitation, the provision for the
repurchase or sale of shares of the Trust by such other party as principal
or as agent of the Trust, and for entry by the other parties to the
contracts into selected dealer agreements with registered securities
dealers to further the purpose of distribution of the Shares.
Section 4.4. Transfer Agent. The Trustees may in their discretion
from time to time enter into a transfer agency and shareholder service
contract whereby the other party to such contract shall undertake to
furnish transfer agency and shareholder services to the Trust. The
contract shall have such terms and conditions as the Trustees may in their
discretion determine not inconsistent with the Declaration or the By-
Laws. Such services may be provided by one or more Persons.
Section 4.5. Custodian. The Trustees may appoint or otherwise
engage one or more banks or trust companies, each having an aggregate
capital, surplus and undivided profits (as shown in its last published
report) of at least five million dollars ($5,000,000) to serve as
Custodian with authority as its agent, but subject to such restrictions,
limitations and other requirements, if any, as may be contained in the By-
Laws of the Trust.
Section 4.6. Parties to Contract. Any contract of the character
des- cribed in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 of this Article IV and
any other contract may be entered into with any Person, although one or
more of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and
no such con-tract shall be invalidated or rendered voidable by reason of
the existence of any such relationship; nor shall any Person holding such
relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of said contract or accountable
for any profit rea- lized directly or indirectly therefrom, provided that
the contract when en- tered into was not inconsistent with the provisions
of this Article IV. The same Person may be the other party to any
contracts entered into pursuant to Sections 4.1, 4.2, 4.3, 4.4 or 4.5
above or otherwise, and any individual may be financially interested or
otherwise affiliated with Persons who are parties to any or all of the
contracts mentioned in this Section 4.6.
ARTICLE V LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND
OTHERS
Section 5.1. No Personal Liability of Shareholders, Trustees,
etc. No Shareholder shall be subject to any personal liability whatsoever
to any Person in connection with Trust Property or the acts, obligations
or affairs of the Trust. No Trustee, officer, employee or agent of the
Trust shall be subject to any personal liability whatsoever to any Person,
other than the Trust or its Shareholders, in connection with the Trust
Property or the af- fairs of the Trust, save only that arising from bad
faith, willful misfeas-ance, gross negligence or reckless disregard for
his duty to such Person; and all such Persons shall look solely to the
Trust Property for satisfac-tion of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee,
officer, employee or agent, as such, of the Trust is made a party to any
suit or proceeding to enforce any such li-ability, he shall not, on
account thereof, be held to any personal liability. The Trust shall
indemnify and hold each Shareholder harmless from and again-st all claims
and liabilities, to which such Shareholder may become subject by reason
of his being or having been a Shareholder, other than by reason of his own
wrongful act or omission, and shall reimburse such Shareholder for all
legal and other expenses reasonably incurred by him in connection with any
such claim or liability. The rights accruing to a Shareholder under this
Section 5.1 shall not exclude any other right to which such Shareholder
may be lawfully entitled, nor shall anything herein contained restrict the
right of the Trust to indemnify or reimburse a Shareholder in any
appropri-ate situation even though not specifically provided herein.
Section 5.2. Non-Liability of Trustees, etc. No Trustee,
officer, employee or agent of the Trust shall be liable to the Trust, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any
breach of trust) except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of his or her duties.
Section 5.3. Indemnification.
(a) The Trustees shall provide for indemnification by the Trust
of any person who is, or has been, a Trustee, officer, employee or
agent of the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee, officer,
employee or agent and against amounts paid or incurred by him in the
settlement thereof, in such manner as the Trustees may provide from
time to time in the By-Laws.
(b) The words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal, or
other, including appeals), actual or threatened; and the words "liability"
and "expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
Section 5.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any
of his duties hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust
Instruments, etc. No purchaser, lender, transfer agent or other Person
dealing with the Trustees or any officer, employee or agent of the Trust
shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by said officer,
employee or agent or be liable for the application of money or property
paid, loaned, or delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obliga- tion, contract, instrument,
certificate, Share, other security of the Trust or undertaking, and every
other act or thing whatsoever executed in connec-tion with the Trust shall
be conclusively presumed to have been executed or done by the executors
thereof only in their capacity as officers, employees or agents of the
Trust. Every written obligation, contract, instrument, certificate,
Share, other security of the Trust or undertaking made or issued by the
Trustees shall recite that the same is executed or made by them not
individually, but as Trustees under the Declaration, and that the
obligations of the Trust under any such instrument are not binding upon
any of the Trustees or Shareholders, individually, but bind only the Trust
Estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not affect the
validity of such obligation, contract instrument, certificate, Share,
security or undertaking and shall not operate to bind the Trustees or
Shareholders individually. The Trustees may maintain insurance for the
protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate
to cover possible tort liability, and such other insurance as the Trustees
in their sole judgment shall deem advisable.
Section 5.6. Reliance on Experts, etc. Each Trustee and officer
or employee of the Trust shall, in the performance of his duties, be fully
and completely justified and protected with regard to any act or any
failure to act resulting from reliance in good faith upon the books of
account or other records or the Trust, upon an opinion of counsel, or upon
reports made to the Trust by any of its officers or employees or by any
Investment Adviser, Distributor, Transfer Agent, selected dealers,
accountants, appraisers or other experts or consultants selected with
reasonable care by the Trustees, officers or employees of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
ARTICLE VI SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The interest of the
beneficiaries hereunder shall be divided into transferable shares of
beneficial interest of $.01 par value. The number of such shares of
beneficial interest autho-rized hereunder is unlimited. All Shares issued
in connection with a dividend in Shares or a split in Shares, shall be
fully paid and nonassessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust
Pro- perty of every description and the right to conduct any business
hereinbefore described are vested exclusively in the Trustees, and the
Shareholders shall have no interest therein other than the beneficial
interest conferred by their Shares, and they shall have no right to call
for any partition or division of any property, profits, rights or
interests of the Trust nor can they be called upon to assume any losses
of the Trust or suffer an assess- ment of any kind by virtue of their
ownership of Shares. The Shares shall be personal property giving only
the rights in the Declaration specifically set forth. The Shares shall
not entitle the holder to preference, preemp-tive, appraisal, conversion
or exchange rights.
Section 6.3. Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the
Trustees and each Shareholder from time to time. It is not the intention
of the Trustees to create a general partnership, limited partnership,
joint stock association, corporation, bailment or any form of legal
relationship other than a trust. Nothing in the Declaration shall be
construed to make the Shareholders, either by themselves or with the
Trustees, partners or mem-bers of a joint stock association.
Section 6.4. Issuance of Shares. The Trustees, in their
descretion may, from time to time without vote of the Shareholders, issue
Shares, in addition to the then issued and outstanding Shares and Shares
held in the treasury, to such party or parties and for such amount and
type of consider- ation, including cash or property, at such time or times
and on such terms as the Trustees may deem best, and may in such manner
acquire other assets (including the acquisition of assets subject to, and
in connection with the assumption of liabilities) and businesses. In
connection with any issuance of Shares, the Trustees may issue fractional
Shares. The Trustees may from time to time divide or combine the Shares
into a greater or lesser number without thereby changing the proportionate
beneficial interests in the Trust. Contributions to the Trust may be
accepted for whole Shares and/or 1/1,000ths of a Share or integral
multiples thereof.
Section 6.5. Register of Shares. A register shall be kept in
respect of the Trust at the principal office of the Trust or at an office
of the Transfer Agent which shall contain the names and addresses of the
Share- holders and the number of Shares held by them respectively and a
record of all transfers thereof. Such register may be in written form or
any other form capable of being converted into written form within a
reasonable time for visual inspection. Such register shall be conclusive
as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the
rights of Shareholders. No Shareholder shall be entitled to receive
payment of any dividend or dis- tribution, nor to have notice given to him
as herein or in the By-Laws pro- vided, until he has given his address to
the Transfer Agent or such other officer or agent of the Trustees as shall
keep the said register for entry thereon. The Trustees, in their
discretion, may authorize the issuance of Share certificates and
promulgate appropriate rules and regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable
on the records of the Trust only by the record holder thereof or by his
agent thereunto duly authorized in writing, upon delivery to the Trustees
or the Trans-fer Agent of a duly executed instrument of transfer, together
with such evi-dence of the genuineness of each such execution and
authorization and of other matters as may reasonably be required. Upon
such delivery the trans-fer shall be recorded on the register of the
Trust. Until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the
proposed transfer.
Any person becoming entitled to any Shares in consequence of the
death, bankruptcy, or incompetence of any Shareholder, or otherwise by
operation of law, shall be recorded on the register of Shares as the
holder of such Shares upon production of the proper evidence thereof to
the Trustees or the Transfer Agent, but until such record is made, the
Shareholder of record shall be deemed to be the holder of such Shares for
all purposes hereunder and neither the Trustees nor any Transfer Agent or
registrar nor any officer or agent of the Trust shall be affected by any
notice of such death, bank-ruptcy or incompetence, or other operation of
law, except as may otherwise be provided by the laws of the Commonwealth
of Massachusetts.
Section 6.7. Notices. Any and all notices to which any
Shareholder may be entitled and any and all communications shall be deemed
duly served or given if mailed, postage prepaid, addressed to any
Shareholder of record at his last known address as recorded on the
register of the Trust. Annual reports and proxy statements need not be
sent to a shareholder if: (i) an annual report and proxy statement for
two consecutive annual meetings, or ii) all, and at least two, checks (if
sent by first class mail) in payment of dividends or interest and shares
during a twelve month period have been mailed to such shareholder's
address and have been returned undelivered. However, delivery of such
annual reports and proxy statements shall resume once a Shareholder's
current address is determined.
Section 6.8. Voting Powers. The Shareholders shall have power to
vote only (i) for the election of Trustees as provided in Section 2.2
here-of, (ii) for the removal of Trustees as provided in Section 2.2
hereof, (iii) with respect to any investment advisory or management
contract as pro-vided in Section 4.1, (iv) with respect to termination of
the Trust as pro-vided in Section 8.2, (v) with respect to any amendment
of the Declaration to the extent and as provided in Section 8.3, (vi) with
respect to any mer-ger, consolidation, conversion or sale of assets as
provided in Sections 8.4, 8.5 and 8.6, (vii) with respect to incorporation
or reorganization of the Trust to the extent and as provided in Section
8.5, (viii) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or
claim should or should not be brought or maintained derivatively or as a
class action on behalf of the Trust or the Shareholders and (ix) with
respect to such additional matters relating to the Trust as may be
required by law, the Declaration, the By-Laws or any registration of the
Trust with the Commission (or any successor agency) or any state, or as
and when the Trustees may consider necessary or desirable. Each whole
Share shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote, except that Shares held in the treasury of
the Trust as of the record date, as determined in accordance with the By-
Laws, shall not be voted. There shall be no cumulative voting in the
election of Trustees. Shareholders shall have no preemptive or other
right to subscribe to any additional Shares or other securities issued by
the Trust. Until Shares are issued, the Trustees may exercise all rights
of Shareholders and may take any action required by law, the Declaration
or the By-Laws to be taken by Shareholders. The By-Laws may include
further provisions for Shareholders' votes and meetings and related
matters.
ARTICLE VII DETERMINATION OF NET ASSET VALUE, NET INCOME AND
DISTRIBUTIONS
Section 7.1. Net Asset Value. The net asset value of each
outstanding Share of the Trust shall be determined on such days and at
such time or times as the Trustees may determine. The method of
determination of net asset value shall be determined by the Trustees and
shall be as set forth in the Registration Statement. The power and duty
to make the calculations may be delegated by the Trustees to any
Investment Adviser, the Custodian, the Transfer Agent or such other person
as the Trustees by resolution may deter-mine. The Trustees may suspend
the determination of net asset value to the extent permitted by the 1940
Act.
Section 7.2. Distributions to Shareholders. The Trustees shall
from time to time distribute ratably among the Shareholders of the Trust
such proportion of the net income, earnings, profits, gains, surplus
(including paidin surplus), capital, or assets of the Trust held by the
Trustees as they may deem proper. Such distribution may be made in cash
or property (including without limitation any type of obligations of the
Trust or any assets thereof), and the Trustees may distribute ratably
among the Shareholders of the Trust additional Shares issuable hereunder
in such manner, at such times, on such terms as the Trustees may deem
proper. Such distri- butions may be among the Shareholders of record
(determined in accordance with the Registration Statement) of the Trust
at the time of declaring a distribution or among the Shareholders of
record of the Trust at such later date as the Trustees shall determine.
The Trustees may always retain from the net income, earnings, profits or
gains of the Trust such amount as they may deem necessary to pay the debts
or expenses of the Trust or to meet ob- ligations of the Trust, or as they
may deem desirable to use in the conduct of its affairs or to retain for
future requirements or extensions of the business. The Trustees may adopt
and offer to Shareholders of the Trust such dividend reinvestment plans
as the Trustees deem appropriate.
Inasmuch as the computation of net income and gains for Federal
income tax purposes may vary from the computation thereof on the books,
the above provisions shall be interpreted to give the Trustees the power
in their discretion to distribute for any fiscal year as ordinary
dividends and as capital gains distributions, respectively, additional
amounts sufficient to enable the Trust to avoid or reduce liability for
taxes.
Section 7.3. Determination of Net Income. The Trustees shall
have the power to determine the net income of the Trust and from time to
time to distribute such net income ratably among the Shareholders as
dividends in cash or additional Shares issuable hereunder. The
determination of net income and the resultant declaration of dividends
shall be as set forth in the Registration Statement. The Trustees or
their delegates shall have full discretion to determine whether any cash
or property received by the Trust shall be treated as income or as
principal and whether any item of expense shall be charged to the income
or the principal account, and their determi-nation made in good faith
shall be conclusive upon the Shareholders. In the case of stock dividends
received, the Trustees shall have full discretion to determine, in the
light of the particular circumstances, how much, if any, of the value
thereof shall be treated as income, the balance, if any, to be treated as
principal.
Section 7.4. Power to Modify Foregoing Procedures.
Notwithstanding any of the foregoing provisions of this Article VII, the
Trustees may prescribe, in their absolute discretion, such other bases and
times for determining the per Share net asset value of the Shares or net
income, or the declaration and payment of dividends and distributions, as
they may deem necessary or desirable to enable the Trust to comply with
any provision of the 1940 Act, or any rule or regulation thereunder, or
any order of exemp- tion issued by the Commission, all as in effect now
or hereafter amended or modified.
ARTICLE VIII DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS,
ETC.
Section 8.1. Duration. The Trust shall continue without
limitation of time but subject to the provision of this Article VIII.
Section 8.2. Termination of Trust.
(a) The Trust may be terminated (i) by the affirmative vote of
the holders of not less than two-thirds (66-2/3%) of the Shares
outstanding and entitled to vote at any meeting of Shareholders of the
Trust except that a Majority Shareholder Vote shall be sufficient if
termination of the Trust has been recommended by two-thirds of the
Trustees, or (ii) by an instrument in writing, without a meeting,
signed by a majority of the Trustees and consented to by the holders of
not less than two-thirds of such Shares of the Trust. Upon the
termination of the Trust:
(i) The Trust shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs
of the Trust and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust,
collect its assets, sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining Trust Property to one or more
persons at public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and to do all other acts appropriate
to liquidate its business; provided that any sale, conveyance,
assignment, exchange, transfer or other disposition of all or
substantially all the Trust Property shall require Shereholder
approval in accordance with Section 8.4 hereof.
(iii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such releases, indemnities
and refunding agreements, as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property, in cash or in kind
or partly each, among the Shareholders of the Trust according to their
respective rights.
(b) After termination of the Trust and distribution to the
Shareholders as herein provied, a majority of the Trustees shall
execute and lodge among the records of the Trust an instrument in
writing setting forth the fact of such termination, and the Trustees
shall thereupon be discharged from all further liabilities and duties
with respect to the Trust, and the rights and interests of all
Shareholders of the Trust shall thereupon cease.
Section 8.3. Amendment Procedure.
(a) Except as provided in paragraph (c) of this Section 8.3, this
Declaration may be amended by a Majority Shareholder Vote, at a meeting
of Shareholders, or by written consent without a meeting. The Trustees
may also amend this Declaration without the vote or consent of
Shareholders (i) to change the name of the Trust, (ii) to supply any
omission, or cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, (iii) if they deem it necessary to conform
this Declaration to the requirements of applicable federal or state
laws or regulations or the requirements of the Internal Revenue Code,
or to eliminate or reduce any federal, state or local taxes which are
or may be payable by the Trust or the Shareholders, but the Trustees
shall not be liable for failing to do so, or (iv) for any other purpose
which does not adversely affect the rights of any Shareholder with respect
to which the amendment is or purports to be applicable.
(b) No amendment may be made under this Section 8.3 which would
change any rights with respect to any Shares of the Trust by reducing
the amount payable thereon upon liquidation of the Trust or by diminishing
or eliminating any voting rights pertaining thereto, except with the vote
or consent of the holders of two-thirds of the Shares of the Trust
outstanding and entitled to vote. Nothing contained in this Declaration
shall permit the amendment of this Declaration to impair the exemption
from personal liability of the Shareholders, Trustees, officers, employees
and agents of the Trust or to permit assessments upon Shareholders set
forth in Section 5.1 above.
(c) No amendment may be made under this Section 8.3 which shall
amend, alter, change or repeal any of the provisions of Sections 8.3,
8.4, 8.6 and 8.7 unless the amendment effecting such amendment,
alteration, change or repeal shall receive the affirmative vote or consent
of that proportion of the Shares outstanding and entitled to vote as would
be necessary to approve the transaction or action set forth in that
respective section under circumstances where the Board of Trustees has
not recommended approval of the transaction or action. Such affirmative
vote or consent shall be in addition to the vote or consent of the
holders of Shares otherwise required by law or by the terms of any
class or series of preferred stock, whether now or hereafter authorized,
or any agreement between the Trust and any national securities
exchange.
(d) A certificate signed by a majority of the Trustees or by the
Secretary or any Assistant Secretary of the Trust, setting forth an
amendment and reciting that it was duly adopted by the Shareholders or
by the Trustees as aforesaid or a copy of the Declaration, as amended,
and executed by a majority of the Trustees or certified by the Secretary
or any Assistant Secretary of the Trust, shall be conclusive evidence of
such amendment when lodged among the records of the Trust. Unless such
amendment or such certificate sets forth some later time for the
effectiveness of such amendment, such amendment shall be effective when
lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended,
covering the first public offering of securities of the Trust shall have
become effective, this Declaration may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust
may merge or consolidate with any other corporation, association, trust
or other organization or may sell, lease or exchange all or substantially
all of the Trust Property, including its good will, upon such terms and
conditions and for such consideration when and as authorized, at any
meeting of Shareholders called for the purpose, by the affirmative vote
of the holders of not less than two-thirds (66-2/3%) of the Shares of the
Trust outstanding and entitled to vote, or by an instrument or instruments
in writing without a meeting, consented to by the holders of not less than
two-thirds (66-2/3%) of such Shares; provided, however, that, if such
merger, consolidation, sale, lease or exchange is recommended by two-
thirds of the Trustees, a Ma-jority Shareholder Vote shall be sufficient
authorization; and any such merger, consolidation, sale, lease or exchange
shall be deemed for all purposes to have been accomplished under and
pursuant to the laws of the Commonwealth of Massachusetts. Nothing
contained herein shall be construed as requiring approval of shareholders
for any sale of assets in the ordinary course of business of the Trust.
Section 8.5. Incorporation and Reorganization. With approval of
a Majority Shareholder Vote, the Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdic-tion or any other trust, partnership, association or other
organization to take over all of the Trust Property or to carry on any
business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust Property to any such
corporation, trust, partnership, association or organization in exchange
for the shares or securities thereof or otherwise, and to lend money to,
subscribe for the shares or securities of, and enter into any contracts
with any such corporation, trust, partnership, association or organization
in which the Trust holds or is about to acquire shares or any other
interest. Subject to Section 8.4 hereof, the Trustees may also cause a
merger or consolidation between the Trust or any successor thereto and any
such corporation, trust, partnership, association or other organization
if and to the extent permitted by law, as provided under the law then in
effect. Nothing contained herein shall be construed as requiring approval
of Shareholders for the Trustees to organize or assist in organizing one
or more corporations, trusts, partnerships, associations or other
organizations and selling, conveying or transferring a portion of the
Trust Property to such organization or entities.
Section 8.6. Conversion. The Trust may be converted at any time
from a "closed-end company" to an "open-end company" as those terms are
defined by the 1940 Act, upon the approval of such a proposal, together
with the necessary amendments to the Declaration of Trust to permit such
a conversion, by the holders of not less than two-thirds (66-2/3%) of the
Trust's outstand-ing Shares entitled to vote, except that if such proposal
is recommended by two-thirds of the total number of Trustees then in
office such proposal may be adopted by a Majority Shareholder Vote.
Commencing with the fiscal year beginning November 1, 1993, and each
fiscal year thereafter, if (a) Shares of the Trust have traded on the
principal securities exchange where listed at an average discount of more
than ten percent (10%), determined on the basis of the discount as of the
end of the last trading day in each week during the period of twelve (12)
calendar weeks preceding the beginning of each such fiscal year, and (b)
during the fiscal year subsequent to such discounted valuation the Trust
receives written requests from the holders of 10 percent (10%) or more of
the Trust's outstanding shares that a propo-sal to convert the Trust to
an open-end company be submitted to the share-holders, the Trustees within
six months will submit to the shareholders a proposal to convert the Trust
from a "closed-end company" to an "open-end company," together with the
necessary amendments to this Declaration of Trust to permit such a
conversion. Upon the adoption of such proposal and related amendments by
not less than two-thirds (66-2/3%) of the Trust's outstanding Shares
entitled to vote, the Trust shall upon complying with any requirements of
the 1940 Act and state law, become an "open-end" investment company. Such
affirmative vote or consent shall be in addition to the vote or consent
of the holders of the Shares otherwise required by law, or any agreement
between the Trust and any national securities exchange.
Section 8.7. Certain Transactions. Notwithstanding any other
provision of this Declaration and subject to the exceptions provided in
pargraph (d) of this Section, the types of transactions described in
paragraph (c) of this Section shall require the affirmative vote or
consent of the holders of eighty percent (80%) of the Shares outstanding
and entitled to vote, when a Principal Shareholder (as defined in
paragraph (b) of this Section) is a party to the transaction. Such
affirmative vote or consent shall be in addition to the vote or consent
of the holders of Shares otherwise required by law or by the terms of any
class of series of preferred stock, whether now or hereafter authorized,
or any agreement between the Trust and any national securities exchange.
(b) The term "Principal Shareholder" shall mean any
corporation, person or other entity which is the beneficial owner,
directly or indirectly, of more than five percent (5%) of the outstanding
Shares and shall include any affiliate or associate, as such terms are
defined in clause (ii) below, of a Principal Shareholder. For the
purposes of this Section, in addition to the Shares which a corporation,
person or other entity beneficially owns directly, (a) any corporation,
person or other entity shall be deemed to be the beneficial owner of any
Shares (i) which it has the right to acquire pursuant to any agreement or
upon exercise of conversion rights or warrants, or otherwise (but
excluding share options granted by the Trust) or (ii) which are
beneficially owned, directly or indirctly (including Shares deemed owned
through application of clause (i) above), by any other corporation, person
or entity with which its "affiliate" or "associate" (as defined below) has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of Shares, or which is its "affiliate" or
"associate" as those terms are defined in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, and (b) the
outstanding Shares shall include Shares deemed owned through application
of clauses (i) and (ii) above but shall not include any other Shares which
may be issuable pursuant to any agreement, or upon exercise of conversion
rights or warrants, or otherwise.
(c) This Section shall apply to the following transactions:
(i) The merger or consolidation of the Trust or any subsidiary
of the Trust with or into any Principal Shareholder.
(ii) The issuance of any securities of the Trust to any Principal
Shareholder for cash.
(iii) The sale, lease or exchange of all or any substantial
part of the assets of the Trust to any Principal Shareholder (except
assets having an aggregate fair market value of less than $1,000,000,
aggregating for the purpose of such computation all assets sold, leased
or exchanged in any series of similar transactions within a twelve-month
period.)
(iv) The sale, lease or exchange to the Trust or any subsidiary
thereof, in exchange for securities of the Trust of any assets of any
Principal Shareholder (except assets having an aggregate fair market value
of less than $1,000,000, aggregating for the purposes of such computation
all assets sold, leased or exchanged in any series of similar transactions
within a twelve-month period).
(d) The provisions of this Section shall not be applicable to (i)
any of the transactions described in paragraph (c) of this Section if
two-thirds of the Board of Trustees of the Trust shall by resolution
have approved a memorandum of understanding with such Principal
Shareholder with respect to and substantially consistent with such
transaction, or (ii) any such transaction with any corporation of which
a majority of the outstanding shares of all classes of stock normally
entitled to vote in elections of direcors is owned of record or
beneficially by the Trust and its subsidiaries.
(e) The Board of Trustees shall have the power and duty to
determine for the purposes of this Section on the basis of information
known to the Trust, whether (i) a corporation, person or entity
beneficially owns more than five percent (5%) of the outstanding Shares,
(ii) a corporation, person or entity is an "affiliate " or "associate" (as
defined above) of another, (iii) the assets being acquired or leased to
or by the Trust or any subsidiary thereof, constitute a substantial
part of the assets of the Trust and have an aggregate fair market value
of less than $1,000,000, and (iv) the memorandum of understanding
referred to in paragraph (d) hereof is substantially consistent with
the transaction covered thereby. Any such determination shall be
conclusive and binding for all purposes of this Section.
ARTICLE IX REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit or cause the
officers of the Trust to submit to the Shareholders a written financial
report of the Trust, including financial statements which shall at least
annually be certified by independent public accountants.
ARTICLE X MISCELLANEOUS
Section 10.1. Filing. This Declaration and any amendment hereto
shall be filed in the office of the Secretary of the Commonwealth of
Massa-chusetts and in such other places as may be required under the laws
of Massachusetts and may also be filed or recorded in such other places
as the Trustees deem appropriate. Each amendment so filed shall be
accompanied by a certificate signed and acknowledged by a Trustee or by
the Secretary or any Assistant Secretary of the Trust stating that such
action was duly taken in a manner provided herein. A restated
Declaration, integrating into a single instrument all of the provisions
of the Declaration which are then in effect and operative, may be executed
from time to time by a majority of the Trustees and shall, upon filing
with the Secretary of the Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
Section 10.2. Resident Agent. CT Corporation System, 2 Oliver
Street, Boston, Massachusetts 02109 is the resident agent of the Trust in
the Commonwealth of Masschusetts.
Section 10.3. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with
reference to the laws thereof and the rights of all parties and the
validity and construction of every provision hereof shall be subject to
and construed according to the laws of said State.
Section 10.4. Organizational Expenses. In the event that any
person advances the organizational expenses of the Trust, such advances
shall become an obligation of the Trust, subject to such terms and
conditions as may be fixed by, and on a date fixed by, or determined with
criteria fixed by the Board of Trustees, to be amortized over a period or
periods to be fixed by the Board.
Section 10.5. Counterparts. The Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the
same instrument, which shall be sufficiently evidenced by any such
original counterpart.
Section 10.6. Reliance by Third Parties. Any certificate
executed by an individual who, according to the records of the Trust,
appears to be a Trustee hereunder, or Secretary or Assistant Secretary of
the Trust, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument
or writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders
present at any meeting or executing any written instrument satisfies the
requirements of this Declaration, (e) the form of any By-Laws adopted by
or the identity of any officers elected by the Trustees, or (f) the
existence of any fact or facts which in any manner relate to the affairs
of the Trust, shall be conclusive evidence as to the matters so certified
in favor of any Person dealing with the Trustees and their successors.
Section 10.7. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code or with other applicable
laws and regulations, the conflicting provisions shall be deemed
superseded by such law or regulation to the extent necessary to eliminate
such conflict; provided, however, that such determination shall not affect
any of the remaining provisions of the Declaration or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall pertain only to such provision in such jurisdiction and shall not
in any manner affect such provision in any other jurisdiction or any
other provision of the Declaration in any jurisdiction.
Section 10.8. Use of the name "Oppenheimer". The name
"Oppenheimer" included in the name of the Trust shall be used pursuant to
a royalty-free, non-exclusive license from Oppenheimer Management
Corporation, incidental to and as part of an advisory, management or
supervisory contract which may be entered into by the Trust with
Oppenheimer Management Corporation. The license may be terminated by
Oppenheimer Management Corporation upon termi-nation of such advisory,
management or supervisory contract or without cause upon 60 days' written
notice, in which case the Trust shall have no further right to use the
name "Oppenheimer" in its name or otherwise and the Trust, the
Shareholders and its officers and Trustees shall promptly take whatever
action may be necessary to change its name accordingly.
IN WITNESS WHEREOF, the undersigned, the Trustees of the Trust,
have executed this instrument this 22nd day of February, 1988.
__________________________
Robert G. Zack, as Trustee and not
Individually
Two World Trade Center, New York, N.Y. 10048
___________________________
Mitchell J. Lindauer, as Trustee and not
Individually
Two World Trade Center New York, N.Y. 10048
___________________________
Katherine P. Feld, as Trustee and not
Individually
Two World Trade Center New York, N.Y. 10048
STATE OF NEW YORK )
) :ss.
COUNTY OF NEW YORK)
On this 22nd day of February, 1988, ROBERT G. ZACK, MITCHELL J.
LINDAUER and KATHERINE P. FELD, known to me and known to be the
individuals described in and who executed the foregoing instrument,
personally appeared before me and they severally acknowledged the
foregoing instrument to be their free act and deed.
________________________________
Notary Public
IN WITNESS WHEREOF, the undersigned has executed this this
instrument this 22nd day of February, 1988.
/s/ Pamela J. Wilson
---------------------
Pamela J. Wilson, as Trustee and not
Individually
One Federal Street, Boston, MA 02110
COMMONWEALTH OF MASSACHUSETTS
Suffolk, SS.
Boston, MA
Then personally appeared the above-named Pamela J. Wilson who
acknowl-edged the foregoing instrument to be her free act and deed.
before me.
_______________________
Notary Public
My commission expires:
- -----------------------
orgzn\680#2
OPPENHEIMER MULTI-SECTOR INCOME TRUST
DECLARATION OF TRUST
AMENDMENT NO. 1
Dated as of March 10, 1988
<PAGE>
The undersigned constituting all of the Trustees of Oppenheimer
Multi-Sector Income Trust (the "Trust") acting pursuant to Section 8.3 of
the Trust's Declaration of Trust dated February 22, 1988 (the "DOT")
hereby amend the DOT as follows:
Article II of the DOT is hereby amended by adding the following:
Section 2.6. Removal of Trustees. The Trust shall comply with the
provisions of Section 16(c) of the 1940 Act as though applicable to the
Trust, and with interpretations thereof by the Commission staff, insofar
as such provisions and interpretations provide for the removal of trustees
of common law trusts and the calling of shareholder meetings for such
purpose; provided, however, that the Trust may at any time or from time
to time apply to the Commission for one or more exemptions from all or
part of said Section 16(c) or a staff interpretation thereof and, if
exemptive order(s) or interpretation(s) are issued or provided by the
Commission or its staff, such order(s) or interpretation(s) shall be
deemed part of Section 16(c) for the purposes of applying this Section
2.6.
Section 5.1 of the DOT is hereby amended and restated as follows:
Section 5.1. No Personal Liability of Shareholders, Trustees, etc.
No Shareholder shall be subject to any personal liability whatsoever to
any Person in connection with Trust Property or the acts, obligations or
affairs of the Trust. The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription
to any Shares or otherwise. Shareholder liability for the acts and
obligations of the Trust is hereby expressly disclaimed. Every note,
bond, contract, or other undertaking issued by or on behalf of the Trust
or the Trustees relating to the Trust shall include a notice and provision
limiting the obligation represented thereby to the Trust and its assets
(but the omission of such notice and provision shall not operate to impose
any liability or obligation on any Shareholder). No Trustee, officer,
employee or agent of the Trust shall be subject to any personal liability
whatsoever to any Person, other than the Trust or its Shareholders, in
connection with the Trust Property or the affairs of the Trust, save only
that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard for his duty to such Person; and all such Persons shall
look solely to the Trust Property for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee or agent, as such, of the Trust is made a party
to any suit or proceeding to enforce any such liability, he shall not, on
account thereof, be held to any personal liability. The Trust shall
indemnify and hold each Shareholder harmless from and against all claims
and liabilities, to which such Shareholder may become subject by reason
of his own wrongful act or omission, and shall reimburse such Shareholder
for all legal and other expenses reasonably incurred by him in connection
with any such claim or liability. The rights accruing to a Shareholder
under this Section 5.1 shall not exclude any other right to which such
Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder
in any appropriate situation even though not specifically provided herein.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as
of this 10th day of March, 1988.
- ------------------------- ---------------------------
Leo Cherne Benjamin Lipstein
50 East 79th Street 333 East 57th Street
New York, NY 10021 New York, NY 10022
- ------------------------- ----------------------------
Edmund T. Delaney Donald W. Spiro
5 Gorham Road 562 Greenhill Road
Chester, CT 06412 Kinnelon, NJ 07405
- ------------------------- -----------------------------
Leon Levy Pauline Trigere
One Sutton Place South 525 Park Avenue
New York, NY 10022 New York, NY 10081
- -------------------------- ------------------------------
Sidney M. Robbins Kenneth A. Randall
50 Overlook Road 6 Whittaker's Mill
Ossining, NY 10562 Williamsburg, VA 23185
ORGZN\680#5
OPPENHEIMER MULTI-SECTOR INCOME TRUST
DECLARATION OF TRUST
AMENDMENT NO. 2
Dated: November 6, 1989
The undersigned constituting all of the Trustees of Oppenheimer Multi-
Sector
Income Trust (the "Trust") acting pursuant to Section 8.3 of the Trust's
Declaration of Trust dated 10/5/88 (the "DOT") hereby amend the DOT as
follows:
Section 1.1 of the DOT is hereby amended and restated as follows:
Section 1.1. Name. The name of the trust created hereby is the
"Oppenheimer Multi-Sector Income Trust," having its principal
place of business at Two World Trade Center, Suite 3400, New
York, New York 10048, and so far as may be practicable the
Trustees shall conduct the Trust's activities, execute all
documents, and sue or be sued under that name, which name (and
the word "Trust" wherever herein used) shall refer to the
Trustees as trustees, and not as individuals, or personally, and
shall not refer to the officers, agents, employees or
Shareholders of the Trust. Should the Trustee determine that the
use of such name is not advisable, they may use such other name
for the Trust as they deem proper and the Trust may hold its
property and conduct its activities under such other name. C.T.
Corporation System, 2 Oliver Street, Boston, Massachusetts 02109,
is hereby appointed as the Trust's resident agent in the
Commonwealth of Massachusetts.
Section 2.2 of the DOT is hereby amended and reinstated as follows:
Section 2.2. Term of Office of Trustees. The Board of Trustees
shall be divided into three classes. Within the limits above
specified, the number of the Trustees in each class shall be
determined by resolution of the Board of Trustees. The term of
office of all of the Trustees shall expire on the date of the
second annual meeting of shareholders or special meeting in lieu
thereof. The term of office of the first class shall expire on
the date of the third annual meeting of shareholders or special
meeting in lieu thereof. The term of office of the second class
shall expire on the date of the fourth annual meeting of
shareholders or special meeting in lieu thereof. The term of
office of the third class shall expire on the date of the fifth
annual meeting of shareholders or special meeting in lieu
thereof. Upon expiration of the term of office of each class as
set forth above, the number of Trustees in such class, as
determined by the Board of Trustees, shall be elected for a three
year term expiring on the date of the annual meeting of
shareholders or special meeting in lieu thereof held in the year
during which such three year term expires. The Trustees shall be
elected at an annual meeting of the shareholders or special
meeting in lieu thereof called for that purpose, except as
provided in Section 2.3 of this Article and each Trustee elected
shall hold office until his successor shall have been elected and
shall have qualified; except (a) that any Trustee may resign his
trust (without need for prior or subsequent accounting) by an
instrument in writing signed by him or her and delivered to the
other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any
Trustee may be removed (provided the aggregate number of Trustees
after such removal shall not be less than the number required by
Section 2.1 hereof) with cause, at any time by written
instrument, signed by the remaining Trustees, specifying the date
when such removal shall become effective; and (c) that any
Trustee who requests in writing to be retired or who has become
incapacitated by illness or injury may be retired by written
instrument signed by a majority of the other Trustees, specifying
date of his retirement. Upon the resignation or removal of a
Trustee, or his otherwise ceasing to be Trustee, he shall execute
and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the
remaining Trustees any Trust property held in the name of the
resigning or removed Trustee. Upon the incapacity or death of
any Trustee, his legal representative shall execute and deliver
on his behalf such documents as the remaining Trustees shall
require as provided in the preceding sentence.
ORGZN/680#3
BY-LAWS
OF
OPPENHEIMER MULTI-SECTOR INCOME TRUST
ARTICLE I
Definitions
The terms "Commission", "Declaration", "Distributor", "Investment
Adviser", "Majority Shareholder Vote", "1940 Act", "Shareholder",
"Shares", Transfer Agent", "Trust", "Trust Property", and "Trustees" have
the respective meanings given them in the Declaration of Trust of
OPPENHEIMER MULTI-SECTOR INCOME TRUST dated February 22, 1988, as amended
from time to time.
ARTICLE II
Offices
SECTION 2.1. Principal Office. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall
be in the City of Boston, County of Suffolk.
SECTION 2.2. Other Offices. In addition to its principal office in
the Commonwealth of Massachusetts, the Trust may have an office or offices
in the City of New York, State of New York, and at such other places
within and without the Commonwealth as the Trustees may from time to time
designate or the business of the Trust may require.
ARTICLE III
Shareholders' Meetings
SECTION 3.1. Place of Meetings. Meetings of Shareholders shall be
held at such place, within or without the Commonwealth of Massachusetts,
as may be designated from time to time by the Trustees.
SECTION 3.2. Annual Meetings. An annual meeting of Shareholders,
at which the Shareholders shall elect Trustees and transact such other
business as may properly come before the meeting, shall be held in April
of each year, the precise date to be fixed by the Board of Trustees, or
such other day as may be fixed by the Trustees.
SECTION 3.3. Special Meetings. Special meetings of Shareholders of
the Trust shall be held whenever called by the Board of Trustees or the
President of the Trust. Special meetings of Shareholders shall also be
called by the Secretary upon the written request of the holders of Shares
entitled to vote not less than twenty-five percent (25%) of all the votes
entitled to be cast at such meeting. Such request shall state the purpose
or purposes of such meeting and the matters proposed to be acted on
thereat. The Secretary shall inform such Shareholders of the reasonable
estimated cost of preparing and mailing such notice of the meeting, and,
upon payment to the Trust of such costs, the Secretary shall give notice
stating the purpose or purposes of the meeting to all entitled to vote at
such meeting. No special meeting need be called upon the request of the
holders of Shares entitled to cast less than a majority of all votes
entitled to be cast at such meeting, to consider any matter which is
substantially the same as a matter voted upon at any special meeting of
Shareholders held during the preceding twelve months.
SECTION 3.4. Notice of Meetings. Written or printed notice of every
Shareholders' meeting stating the place, date, and purpose or purposes
thereof, shall be given by the Secretary not less than ten (10) nor more
than ninety (90) days before such meeting to each Shareholder entitled to
vote at such meeting. Such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
Shareholder at his address as it appears on the records of the Trust.
SECTION 3.5. Quorum and Adjournment of Meetings. Except as
otherwise provided by law, by the Declaration or by these By-Laws, at all
meetings of Shareholders the holders of a majority of the Shares issued
and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be requisite and shall constitute a quorum for
the transaction of business. In the absence of a quorum, the Shareholders
present or represented by proxy and entitled to vote thereat shall have
power to adjourn the meeting from time to time. Any adjourned meeting may
be held as adjourned without further notice. At any adjourned meeting at
which a quorum shall be present, any business may be transacted as if the
meeting had been held as originally called.
SECTION 3.6. Voting Rights, Proxies. At each meeting of
Shareholders, each holder of record of Shares entitled to vote thereat
shall be entitled to one vote in person or by proxy, executed in writing
by the Shareholder or his duly authorized attorney-in-fact, for each Share
of beneficial interest of the Trust and for the fractional portion of one
vote for each fractional Share entitled to vote so registered in his name
on the records of the Trust on the date fixed as the record date for the
determination of Shareholders entitled to vote at such meeting. No proxy
shall be valid after eleven months from its date, unless otherwise
provided in the proxy. At all meetings of Shareholders, unless the voting
is conduc-ted by inspectors, all questions relating to the qualification
of voters and the validity of proxies and the acceptance or rejection of
votes shall be decided by the chairman of the meeting. Pursuant to a
resolution of a majority of the Trustees, proxies may be solicited in the
name of one or more Trustees or Officers of the Trust.
SECTION 3.7. Vote Required. Except as otherwise provided by law,
by the Declaration of Trust, or by these By-Laws, at each meeting of
Shareholders at which a quorum is present, all matters shall be decided
by Majority Shareholder Vote.
SECTION 3.8. Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at
the meeting or any adjournment thereof. If Inspectors of Election are not
so appointed, the chairman of any meeting of Shareholders may, and on the
request of any Shareholder or his proxy shall, appoint Inspectors of
Election of the meeting. In case any person appointed as Inspector fails
to appear or fails or refuses to act, the vacancy may be filled by
appointment made by the Trustees in advance of the convening of the
meeting or at the meeting by the person acting as chairman. The
Inspectors of Election shall determine the number of Shares outstanding,
the Shares represented at the meeting, the existence of a quorum, the
authenticity, validity and effect of proxies, shall receive votes, ballots
or consents, shall hear and determine all challenges and questions in any
way arising in connection with the right to vote, shall count and tabulate
all votes or consents, determine the results, and do such other acts as
may be proper to conduct the election or vote with fairness to all
Shareholders. On request of the chairman of the meeting, or of any
Shareholder or his proxy, the Inspectors of Election shall make a report
in writing of any challenge or question or matter determined by them and
shall execute a certificate of any facts found by them.
SECTION 3.9. Inspection of Books and Records. Shareholders shall
have such rights and procedures of inspection of the books and records of
the Trust as are granted to Shareholders under the Corporations and
Associations Law of the State of Massachusetts.
SECTION 3.10. Action by Shareholders Without Meeting. Except as
otherwise provided by law, the provisions of these By-Laws relating to
notices and meetings to the contrary notwithstanding, any action required
or permitted to be taken at any meeting of Shareholders may be taken
without a meeting if a majority of the Shareholders entitled to vote upon
the action consent to the action in writing and such consents are filed
with the records of the Trust. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
ARTICLE IV
Trustees
SECTION 4.1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or special meetings of the Trustees.
Regular meetings of the Trustees may be held at such time and place as
shall be determined from time to time by the Trustees without further
notice. Special meetings of the Trustees may be called at any time by the
President and shall be called by the President or the Secretary upon the
written request of any two (2) Trustees.
SECTION 4.2. Notice of Special Meetings. Written notice of special
meetings of the Trustees, stating the place, date and time thereof, shall
be given not less than two (2) days before such meeting to each Trustee,
personally, by telegram, by mail, or by leaving such notice at his place
of residence or usual place of business. If mailed, such notice shall be
deemed to be given when deposited in the United States mail, postage
prepaid, directed to the Trustee at his address as it appears on the
records of the Trust. Subject to the provisions of the 1940 Act, notice
or waiver of notice need not specify the purpose of any special meeting.
SECTION 4.3. Telephone Meetings. Except as may otherwise be
required by law, any Trustee, or any member or members of any committee
designated by the Trustees, may participate in a meeting of the Trustees,
or any such committee, as the case may be, by means of a conference
telephone or similar communications equipment if all persons participating
in the meeting can hear each other at the same time. Participation in
a meeting by these means constitutes presence in person at the meeting.
SECTION 4.4. Quorum, Voting and Adjournment of Meetings. At all
meetings of the Trustees, a majority of the Trustees shall be requisite
to and shall constitute a quorum for the transaction of business. If a
quorum is present, the affirmative vote of a majority of the Trustees
present shall be the act of the Trustees, unless the concurrence of a
greater proportion is expressly required for such action by law, the
Declaration or these By-Laws. If at any meeting of the Trustees there be
less than a quorum present, the Trustees present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall have been obtained.
SECTION 4.5. Action by Trustees Without Meeting. The provisions of
these By-Laws covering notices and meetings to the contrary
notwithstanding, and except as required by law, any action required or
permitted to be taken at any meeting of the Trustees may be taken without
a meeting if a consent in writing setting forth the action shall be signed
by all of the Trustees entitled to vote upon the action and such written
consent is filed with the minutes of proceedings of the Trustees.
SECTION 4.6. Expenses and Fees. Each Trustee may be allowed
expenses, if any, for attendance at each regular or special meeting of the
Trustees, and each Trustee who is not an officer or employee of the Trust
or of its investment manager or underwriter or of any corporate affiliate
of any of said persons shall receive for services rendered as a Trustee
of the Trust such compensation as may be fixed by the Trustees. Nothing
herein contained shall be construed to preclude any Trustee from serving
the Trust in any other capacity and receiving compensation therefor.
SECTION 4.7. Execution of Instruments and Documents and Signing of
Checks and Other Obligations and Transfers. All instruments, documents
and other papers shall be executed in the name and on behalf of the Trust
and all checks, notes, drafts and other obligations for the payment of
money by the Trust shall be signed, and all transfer of securities
standing in the name of the Trust shall be executed, by the President, any
Vice President or the Treasurer or by any one or more officers or agents
of the Trust as shall be designated for that purpose by vote of the
Trustees.
SECTION 4.8. Indemnification of Trustees, Officers, Employees and
Agents.
(a) As used in this Declaration of Trust the following terms shall
have the meanings set forth below:
(i) the term "indemnitee" shall mean any present or
former Trustee, officer or employee of the Trust, any
present or former Trustee, partner, Director or
officer of another trust, partnership, corporation or
association whose securities are or were owned by the
Trust or of which the Trust is or was a creditor and
who served or serves in such capacity at the request
of the Trust, and the heirs, executors,
administrators, successors and assigns of any of the
foregoing; however, whenever conduct by an indemnitee
is referred to, the conduct shall be that of the
original indemnitee rather than that of the heir,
executor, administrator, successor or assignee;
(ii) the term "covered proceeding" shall mean any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative
or investigative, to which an indemnitee is or was a
party or is threatened to be made a party by reason
of the fact or facts under which he or it is an
indemnitee as defined above;
(iii) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of
the office in question;
(iv) the term "covered expenses" shall mean expenses
(including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably
incurred by an indemnitee in connection with a
covered proceeding; and
(v) the term "adjudication of liability" shall mean, as
to any covered proceeding and as to any indemnitee,
an adverse determination as to the indemnitee whether
by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent.
(b) The Trust shall not indemnify any indemnitee for any covered
expenses in any covered proceeding if there has been an
adjudication of liability against such indemnitee expressly
based on a finding of a disabiling conduct.
(c) Except as set forth in paragraph (b) above, the Trust shall
indemnify any indemnitee for covered expenses in any covered
proceeding, whether or not there is an adjudication of
liability as to such indemnitee, such indemnification by the
Trust to be to the fullest extent now or hereafter permitted
by any applicable law unless the By-Laws limit or restrict
the indemnification to which any indemnitee may be entitled.
The Board of Trustees may adopt By-Law provisions to
implement paragraphs (a), (b) and (c) hereof.
(d) Nothing herein shall be deemed to affect the right of the
Trust and/or any indemnitee to acquire and pay for any
insurance covering any or all indemnitees to the extent
permitted by applicable law or to affect any other
indemnification rights to which any indemnitee may be
entitled to the extent permitted by applicable law. Such
rights to indemnification shall not, except as otherwise
provided by law, be deemed exclusive of any other rights to
which such indemnitee may be entitled under any statute, By-
Law, contract or otherwise.
(e) In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his being or
having been a Shareholder and not because of his acts or
omissions or for some other reason, the Shareholder or
former Shareholder (or his heirs, executors, administrators
or other legal representatives or in the case of a
corporation or other entity, its corporate or other general
successor) shall be entitled out of the Trust estate to be
held harmless from and indemnified against all loss and
expense arising from such liability. The Trust shall, upon
request by the Shareholder, assume the defense of any such
claim made against any Shareholder for any act or obligation
of the Trust and satisfy any judgment thereon.
ARTICLE V
Committees
SECTION 5.1. Executive and Other Committees. The Trustees, by
resolution adopted by a majority of the Trustees, may designate an
Executive Committee and/or other committees, each committee to consist of
two (2) or more of the Trustees of the Trust and may delegate to such
committees, in the intervals between meetings of the Trustees, any or all
of the powers of the Trustees in the management of the business and
affairs of the Trust. In the absence of any member of any such committee,
the members thereof present at any meeting, whether or not they constitute
a quorum, may appoint a Trustee to act in place of such absent member.
Each such committee shall keep a record of its proceedings.
The Executive Committee and any other committee shall fix its own
rules or procedure, but the presence of at least fifty percent (50%) of
the members of the whole committee shall in each case be necessary to
constitute a quorum of the committee and the affirmative vote of the
majority of the members of the committee present at the meeting shall be
necessary to take action.
All actions of the Executive Committee shall be reported to the
Trustees at the meeting thereof next succeeding to the taking of such
action.
SECTION 5.2. Advisory Committee. The Trustees may appoint an
advisory committee which shall be composed of persons who do not serve the
Trust in any other capacity and which shall have advisory functions with
respect to the investments of the Trust but which shall have no power to
determine that any security or other investment shall be purchased, sold
or otherwise disposed of by the Trust. The number of persons constituting
any such advisory committee shall be determined from time to time by the
Trustees. The members of any such advisory committee may receive
compensation for their services and may be allowed such fees and expenses
for the attendance at meetings as the Trustees may from time to time
determine to be appropriate.
SECTION 5.3. Committee Action Without Meeting. The provisions
of these By-Laws covering notices and meetings to the contrary
notwithstanding, and except as required by law, any action required or
permitted to be taken at any meeting of any Committee of the Trustees
appointed pursuant to Section 5.1 of these By-Laws may be taken without
a meeting if a consent in writing setting forth the action shall be signed
by all members of the Committee entitled to vote upon the action and such
written consent is filed with the records of the proceedings of the
Committee.
ARTICLE VI
Officers
SECTION 6.1. Executive Officers. The executive officers of the
Trust shall be a Chairman, a President, one or more Vice Presidents, a
Secretary and a Treasurer. The Chairman shall be selected from among the
Trustees but none of the other executive officers need be a Trustee. Two
or more officers, except those of President and any Vice President, may
be held by the same person, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity.
The executive officers of the Trust shall be elected annually by
the Trustees and each executive officer so elected shall hold office until
his successor is elected and has qualified.
SECTION 6.2. Other Officers and Agents. The Trustees may also
elect one or more Assistant Vice Presidents, Assistant Secretaries and
Assistant Treasurers and may elect, or may delegate to the President the
power to appoint, such other officers and agents as the Trustees shall at
any time or from time to time deem advisable.
SECTION 6.3. Term and Removal and Vacancies. Each officer of the
Trust shall hold office until his successor is elected and has qualified.
Any officer or agent of the Trust may be removed by the Trustees whenever,
in their judgment, the best interests of the Trust will be served thereby,
but such removal shall be without prejudice to the contractual rights, if
any, of the person so removed.
SECTION 6.4. Compensation of Officers. The compensation of
officers and agents of the Trust shall be fixed by the Trustees, or by the
President to the extent provided by the Trustees with respect to officers
appointed by the President.
SECTION 6.5. Power and Duties. All officers and agents of the
Trust, as between themselves and the Trust, shall have such authority and
perform such duties in the management of the Trust as may be provided in
or pursuant to these By-Laws, or to the extent not so provided, as may be
prescribed by the Trustees; provided, that no rights of any third party
shall be affected or impaired by any such By-Law or resolution of the
Trustees unless he has knowledge thereof.
SECTION 6.6. The Chairman. The Chairman shall preside at all
meetings of the Shareholders and of the Trustees, and he shall perform
such other duties as the Trustees may from time to time prescribe.
SECTION 6.7. The President. The President shall be the chief
executive officer of the Trust; he shall have general and active
management of the business of the Trust, shall see that all orders and
resolutions of the Trustees are carried into effect, and, in connection
therewith, shall be authorized to delegate to one or more Vice Presidents
such of his powers and duties at such times and in such manner as he may
deem advisable.
SECTION 6.8. The Vice Presidents. The Vice President shall be
of such number and shall have such titles as may be determined from time
to time by the Trustees. The Vice President, or, if there be more than
one, the Vice Presidents in the order of their seniority as may be
determined from time to time by the Trustees or the President, shall, in
the absence or disability of the President, exercise the powers and
perform the duties of the President, and he or they shall perform such
other duties as the Trustees or the President may from time to time
prescribe.
SECTION 6.9. The Assistant Vice Presidents. The Assistant Vice
President, or, if there be more than one, the Assistant Vice Presidents,
shall perform such duties and have such powers as may be assigned them
from time to time by the Trustees or the President.
SECTION 6.10. The Secretary. The Secretary shall attend all
meetings of the Trustees and all meetings of the Shareholders and record
all the proceedings of the meetings of the Shareholders and of the
Trustees in a book to be kept for that purpose, and shall perform like
duties for the standing committees when required. He shall give, or cause
to be given, notice of all meetings of the Shareholders and special
meetings of the Trustees, and shall perform such other duties and have
such powers as the Trustees, or the President, may from time to time
prescribe. He shall keep in safe custody the seal of the Trust and affix
or cause the same to be affixed to any instrument requiring it, and, when
so affixed, it shall be attested by his signature or by the signature of
an Assistant Secretary.
SECTION 6.11. The Assistant Secretaries. The Assistant
Secretary, or, if there be more than one, the Assistant Secretaries in the
order determined by the Trustees or the President, shall, in the absence
or disability of the Secretary, perform the duties and exercise the powers
of the Secretary and shall perform such duties and have such other powers
as the Trustees or the President may from time to time prescribe.
SECTION 6.12. The Treasurer. The Treasurer shall be the chief
financial officer of the Trust. He shall keep or cause to be kept full
and accurate accounts of receipts and disbursements in books belonging to
the Trust, and he shall render to the Trustees and the President, whenever
any of them require it, an account of his transactions as Treasurer and
of the financial condition of the Trust; and he shall perform such other
duties as the Trustees, or the President, may from time to time prescribe.
SECTION 6.13. The Assistant Treasurers. The Assistant Treasurer,
or, if there shall be more than one, the Assistant Treasurers in the order
determined by the Trustees or the President, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers
of the Treasurer and shall perform such other duties and have such other
powers as the Trustees, or the President, may from time to time prescribe.
SECTION 6.14. Delegation of Duties. Whenever an officer is
absent or disabled, or whenever for any reason the Trustees may deem it
desirable, the Trustees may delegate the powers and duties of an officer
or officers to any other officer or officers or to any Trustee or
Trustees.
ARTICLE VII
Dividends and Distributions
Subject to any applicable provisions of law and the Declaration,
dividends and distributions upon the Shares may be declared at such
intervals as the Trustees may determine, in cash, in securities or other
property, or in Shares, from any sources permitted by law, all as the
Trustees shall from time to time determine.
Inasmuch as the computation of net income and net profits from the
sale of securities or other properties for federal income tax purposes may
vary from the computation thereof on the records of the Trust, the
Trustees shall have power, in their discretion, to distribute as income
dividends and as capital gain distributions, respectively, amounts
sufficient to enable the Trust to avoid or reduce liability for federal
income taxes.
ARTICLE VIII
Certificates of Shares
SECTION 8.1. Certificates of Shares. Certificates for Shares of
the Trust shall be in such form and of such design as the Trustees shall
approve, subject to the right of the Trustees to change such form and
design at any time or from time to time, and shall be entered in the
records of the Trust as they are issued. Each such certificate shall bear
a distinguishing number; shall exhibit the holder's name and certify the
number of full Shares owned by such holder; shall be signed by or in the
name of the Trust by the President, or a Vice President, and countersigned
by the Secretary or an Assistant Secretary or the Treasurer and an
Assistant Treasurer of the Trust; shall be sealed with the seal; and shall
contain such recitals as may be required by law. Where any certificate
is signed by a Transfer Agent or by a Registrar, the signature of such
officers and the seal may be facsimile, printed or engraved. The Trust
may, at its option, determine not to issue a certificate or certificates
to evidence Shares owned of record by any Shareholder.
In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall appear on, any such certificate
or certificates shall cease to be such officer or officers of the Trust,
whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Trust, such
certificate or certificates shall, nevertheless, be adopted by the Trust
and be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or
signatures shall appear therein had not ceased to be such officer or
officers of the Trust.
No certificate shall be issued for any share until such share is
fully paid.
SECTION 8.2 Transfer of Shares. Shares shall be transferable on
the books of the Trust by the holder thereof in person or by his duly
authorized attorney or legal representative, upon surrender and
cancellation of certificates, if any, for the same number of Shares, duly
endorsed or accompanied by proper instruments of assignment and transfer,
with such proof of the authenticity of the signature as the Trust or its
agent may reasonably require; in the case of shares not represented by
certificates, the same or similar requirements may be imposed by the Board
of Trustees.
SECTION 8.3 Share Ledgers. The share ledgers of the Trust,
containing the name and address of the Shareholders of the Trust and the
number of shares held by them respectively, shall be kept at the principal
offices of the Trust or, if the Trust employs a transfer agent, at the
offices of the transfer agent of the Trust.
SECTION 8.4. Lost, Stolen, Destroyed and Mutilated Certificates.
The Trustees may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Trust
alleged to have been lost, stolen or destroyed, upon satisfactory proof
of such loss, theft, or destruction; and the Trustees may, in their
discretion, require the owner of the lost, stolen or destroyed
certificate, or his legal representative, to give to the Trust and to such
Registrar, Transfer Agent and/or Transfer Clerk as may be authorized or
required to countersign such new certificate or certificates, a bond in
such sum and of such type as they may direct, and with such surety or
sureties, as they may direct, as indemnity against any claim that may be
against them or any of them on account of or in connection with the
alleged loss, theft or destruction of any such certificate.
ARTICLE IX
Waiver of Notice
Whenever any notice of the time, place or purpose of any meeting
of Shareholders, Trustees, or of any committee is required to be given in
accordance with law or under the provisions of the Declaration or these
By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at the meeting
of Shareholders, Trustees or committee, as the case may be, in person,
shall be deemed equivalent to the giving of such notice to such person.
ARTICLE X
Miscellaneous
SECTION 10.1. Location of Books and Records. The books and
records of the Trust may be kept outside the Commonwealth of Massachusetts
at such place or places as the Trustees may from time to time determine,
except as otherwise required by law.
SECTION 10.2. Record Date. The Trustees may fix in advance a
date as the record date for the purpose of determining Shareholders
entitled to notice of, or to vote at, any meeting of Shareholders, or
Shareholders entitled to receive payment of any dividend or the allotment
of any rights, or in order to make a determination of Shareholders for any
other proper purpose. Such date, in any case, shall be not more than
ninety (90) days, and in case of a meeting of Shareholders not less than
ten (10) days, prior to the date on which particular action requiring such
determination of Shareholders is to be taken. In lieu of fixing a record
date the Trustees may provide that the transfer books shall be closed for
a stated period but not to exceed, in any case, twenty (20) days. If the
transfer books are closed for the purpose of determining Shareholders
entitled to notice of a vote at a meeting of Shareholders, such books
shall be closed for at least ten (10) days immediately preceding such
meeting.
SECTION 10.3. Seal. The Trustees shall adopt a seal, which shall
be in such form and shall have such inscription thereon as the Trustees
may from time to time provide. The seal of the Trust may be affixed to
any document, and the seal and its attestation may be lithographed,
engraved or otherwise printed on any document with the same force and
effect as if it had been imprinted and attested manually in the same
manner and with the same effect as if done by a Massachusetts business
corporation under Massachusetts law.
SECTION 10.4. Fiscal Year. The fiscal year of the Trust shall
end on such date as the Trustees may by resolution specify, and the
Trustees may by resolution change such date for future fiscal years at any
time and from time to time.
SECTION 10.5. Orders for Payment of Money. All orders or
instructions for the payment of money of the Trust, and all notes or other
evidences of indebtedness issued in the name of the Trust, shall be signed
by such officer or officers or such other person or persons as the
Trustees may from time to time designate, or as may be specified in or
pursuant to the agreement between the Trust and the bank or trust company
appointed as Custodian of the securities and funds of the Trust.
ARTICLE XI
Compliance with Federal Regulations
The Trustees are hereby empowered to take such action as they may
deem to be necessary, desirable or appropriate so that the Trust is or
shall be in compliance with any federal or state statute, rule or
regulation with which compliance by the Trust is required.
ARTICLE XII
Amendments
These By-Laws may be amended, altered, or repealed, or new By-Laws
may be adopted, (a) by a Majority Shareholder Vote, or (b) by the
Trustees; provided, however, that no By-Law may be amended, adopted or
repealed by the Trustees if such amendment, adoption or repeal requires,
pursuant to law, the Declaration, or these By-Laws, a vote of the
Shareholders. The Trustees shall in no event adopt By-Laws which are in
conflict with the Declaration, and any apparent inconsistency shall be
construed in favor of the related provisions in the Declaration.
ARTICLE XIII
Declaration of Trust
The Declaration of Trust establishing Oppenheimer Special Government
Trust, dated February 22, 1988, a copy of which is on file in the office
of the Secretary of the Commonwealth of Massachusetts, provides that the
name Oppenheimer Premium Government Fund refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, Shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to
their private property for the satisfaction of any obligation or claim or
otherwise, in connection with the affairs of said Trust, but the Trust
Estate only shall be liable.
orgzn\680#4
Amendment No. 1 to the By-Laws of
Oppenheimer Multi-Sector Income Trust
SECTION 3.2 of ARTICLE III of the By-Laws of Oppenheimer Multi-Sector
Income Trust is hereby amended to read in its entirety as follows:
"SECTION 3.2. Annual Meetings. An annual meeting of
Shareholders, at which the Shareholders shall elect Trustees and
transact such other business as may properly come before the
meeting, shall be held each year on such date and at such time
as shall be fixed by the Board of Trustees."
ORGZN\680
Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x
10-3/4" decorative border, 5/16" wide)
(at left) (at right)
ORGANIZED UNDER THE THIS CERTIFICATE IS
LAWS OF THE COMMONWEALTH TRANSFERABLE IN DENVER,
OF MASSACHUSETTS COLORADO OR IN THE CITY
OF NEW YORK, NEW YORK
NUMBER
OF SHARES SHARES
(at left, box for (at right, box for
share certificate number) number of shares)
(at right)
CUSIP 683933 10 5
SEE REVERSE FOR
CERTAIN DEFINITIONS
(centered, the following text)
OPPENHEIMER MULTI-SECTOR INCOME TRUST
(at left, the following text)
This Is to Certify That
(at left, the following text)
is the owner of
(beginning at left, the following text)
FULLY PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST $.01 PAR VALUE
, OF OPPENHEIMER MULTI-SECTOR INCOME TRUST (hereinafter called the
"Fund"), transferable on the books of the Fund by the holder hereof in
person or by duly authorized attorney, upon surrender of this certificate
properly endorsed. This certificate and the shares represented hereby are
issued and shall be held subject to all of the provisions of the
Declaration of Trust and By-Laws of the Fund, each as from time to time
amended, to all of which the holder by acceptance hereof expressly
assents. This Certificate is not valid until countersigned and registered
by the Transfer Agent and Registrar.
Witness the facsimile seal of the Fund and the facsimile signatures of its
duly authorized officers.
(at left, the following text) (at right, following text)
Dated:
(signature at left of seal) Countersigned and Registered:
/s/ Donald Spiro SHAREHOLDER FINANCIAL SERVICES, INC.
- ----------------------- (Denver) Transfer Agent and
President Registrar
/s/ George C. Bowen By:
- ------------------------ Authorized Signature
Treasurer
UNITED MISSOURI TRUST CO. OF NEW YORK
(New York) Co-Transfer Agent
and Co-Registrar
By:
Authorized Signature
(centered)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER MULTI-SECTOR INCOME TRUST
1988
SEAL
COMMONWEALTH OF MASSACHUSETTS
<PAGE>
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
(beginning at left, the following text)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN WROS - as joint tenants with
NOT TC - right of survivorship and not
as tenants in common
(at right, the following text,
parallel with the above abbreviations)
UNIF GIFT MIN ACT - ( ) Custodian ( )
-------- --------
(Cust) (Minor)
Under UGMA/UTMA
( )
--------------
(State)
(centered, the following text)
Additional abbreviations may also be used though not in the above list.
(beginning at left, the following text)
For value received ----------------- hereby sell, assign and transfer unto
- --------------------------------------------------------------------------
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND
PROVIDE CERTIFICATION BY TRANSFEREE)
- --------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- --------------------------------------------------------------------------
- ------------------------------------------------------------------- Shares
of the beneficial interest represented by the written Certificate and do
hereby irrevocably constitute and appoint ----------------------------
Attorney to transfer the said shares on the books of the within-named
Fund, with full power of substitution in the premises.
Dated: ------------------------- Signed: -------------------------
--------------------------------
(both must sign if joint owners)
Signature(s) guaranteed by --------------------------------
(Firm or Bank)
--------------------------------
(Officer)
----------------------------------------------
The signature(s) to this assignment must
correspond with the name as written upon the face
for the certificate in every particular, without
alteration or enlargement or any change
whatever.
(beginning at left, the following text)
Signatures must be guaranteed by a financial institution of the type
identified in the policies and procedures of Shareholder Financial
Servcies, Inc.
CERTIFIC\680CERT
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 22nd day of October, 1990, by and between
OPPENHEIMER MULTI-SECTOR INCOME TRUST (hereinafter called the "Trust"),
and OPPENHEIMER MANAGEMENT CORPORATION (hereinafter called the "Adviser").
WHEREAS, the Trust is a closed-end, diversified management investment
company registered as such with the Securities and Exchange Commission
(the "Commission") pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), and the Adviser is a registered investment
adviser;
NOW, THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth, it is agreed by and between the parties as follows:
1. In General The Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Trust with respect to the
investment of its assets; to supervise and arrange the purchases of
securities for and the sale of securities held in the portfolio of the
Trust; and to furnish facilities and furnish and supervise personnel as
shall be required to provide the services described herein.
2. Duties and Obligations of the Adviser with respect to investment
of assets of the Trust
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees, the Adviser
shall:
(i) Regularly provide investment advice and
recommendations to the Trust with respect to its
investments, investment policies and the purchase and
sale of securities and other investments
(collectively, "securities");
(ii) Supervise continuously the investment program of the
Trust and the composition of its portfolio;
(iii) Arrange, subject to the provisions of paragraph "4"
hereof, for the purchase of securities and other
investments and for the sale of securities and other
investments held in the portfolio of the Trust; and
(iv) Prepare proxy materials for meetings of the Trust's
shareholders and such registrations and reports as may
be required by federal securities laws.
(b) Any investment advice furnished by the Adviser under this
section shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the provisions of the Investment Company Act
of 1940, and of any rules or regulations in force thereunder; (2) any
other applicable provision of law; (3) the provisions of the Declaration
of Trust and By-Laws of the Trust as amended from time to time; (4) any
policies and determinations of the Board of Trustees of the Trust; and (5)
the terms of the registration statement of the Trust, as amended from
time to time under the Securities Act of 1933 and the Investment Company
Act of 1940.
(c) Nothing in this Agreement shall prevent the Adviser or any
officer thereof from acting as investment adviser for any other person,
firm or corporation and shall not in any way limit or restrict the Adviser
or any of its directors, officers, stockholders or employees from buying,
selling or trading any securities for its or their own accounts or for the
accounts of other for whom it or they may be acting, provided, however,
that the Adviser expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of its
obligations to the Trust under this Agreement.
(d) The Adviser may obtain investment information, research or
assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services, provided
that the Trust shall not be required to pay any compensation other than
as provided by the terms of this Agreement and subject to the provisions
of Paragraph 4 hereof.
3. Trust Administration and Allocation of Expenses. The Adviser
shall at its expense provide all executive, administrative and clerical
personnel as shall be required to provide effective administration for the
Trust, except such services, facilities and personnel as the Trust has
contracted to obtain pursuant to the Administration Agreement annexed
hereto as Exhibit A. Services to be provided by the Adviser hereunder
shall include the compilation and maintenance of such records with respect
to the Trust's operations as may reasonably be required; the preparation
and filing of such reports with respect thereto as shall be required by
the Securities and Exchange Commission and periodic reports with respect
to its operations for the shareholders of the Trust except required
reports to shareholders and Form N-SAR (or such other form as the SEC may
substitute therefor); preparation of proxy materials for meetings of the
Trust's shareholders; and the preparation of such registrations and
reports as may be required by Federal securities laws. The Adviser shall,
at its own cost and expense, also provide the Trust with adequate office
space, facilities and equipment. The Adviser shall, at its own expense,
provide such officers for the Trust as the Trust's Board may request.
All other costs and expenses not expressly assumed by the Adviser
under this Agreement shall be paid by the Trust, including, but not
limited to: (i) interest and taxes, including issue and transfer taxes,
incurred by or levied on the Fund; (ii) insurance premiums for fidelity
and other coverage requisite to its operations; (iii) compensation and
expenses of its Trustees other than those associated or affiliated with
the Adviser; (iv) legal and audit expenses; (v) custodian, dividend paying
agent, registrar and transfer agent fees and expenses (including charges
and expenses of the Trust's Dividend Reinvestment Plan Agent) and
brokerage commissions, if any; (viii) fees and expenses, other than as
hereinabove provided, incident to the registration, under Federal law, of
shares of the Trust for public sale; (ix) except as noted above, all other
expenses incidental to holding meetings of the Trust's shareholders; (x)
payments under the Trust's Administration Agreement; (xi) fees and
expenses of listing and maintaining the listing of the Trust's shares of
any national securities exchange; (xii) cost of certificates representing
the Trust's shares; and (xiii) such non-recurring expenses as may arise,
including litigation affecting the Trust and the legal obligation which
the Trust may have to indemnify its officers and Trustees with respect
thereto.
4. Portfolio Transactions and Brokerage.
(a) The Adviser is authorized, in arranging the purchase and sale
of the Trust's portfolio securities, to employ or deal with such members
of securities or commodities exchanges, brokers or dealers (hereinafter
"broker-dealers"), including "affiliated" broker-dealers (as that term is
defined in the Investment Company Act), as may, in its best judgment,
implement the policy of the Trust to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
security price obtainable) of the Trust's portfolio transactions as well
as to obtain, consistent with the provisions of subparagraph (c) of this
paragraph 4, the benefit of such investment information or research as
will be of significant assistance to the performance by the Adviser of its
investment management functions.
(b) The Adviser shall select broker-dealers to effect the Trust's
portfolio transactions on the basis of its estimate of their ability to
obtain best execution of particular and related portfolio transactions.
The abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by the Adviser on the basis of all
relevant factors and considerations including, insofar as feasible, the
execution capabilities required by the transaction or transactions; the
ability and willingness of the broker-dealer to facilitate the Trust's
portfolio transactions by participating therein for its own account; the
importance to the Trust of speed, efficiency or confidentiality; the
broker-dealer's apparent familiarity with sources from or to whom
particular securities might be purchased or sold; as well as any other
matters relevant to the selection of a broker-dealer for particular and
related transactions of the Trust.
(c) The Adviser shall have discretion, in the interests of the
Trust, to allocate brokerage on the Trust's portfolio transactions to
broker-dealers, other than an affiliated broker-dealer, qualified to
obtain best execution of such transactions who provide brokerage and/or
research services (as such services are defined in Section 28(e)(3) of the
Securities Exchange Act of 1934) for the Trust and/or other accounts for
which the Adviser or its affiliates exercise "investment discretion" (as
that term is defined in Section 3(a)(35) of the Securities Exchange Act
of 1934) and to cause the Trust to pay such broker-dealers a commission
for effecting a portfolio transaction for the Trust that is in excess of
the amount of commission another broker-dealer adequately qualified to
effect such transaction would have charged for effecting that transaction,
if the Adviser determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Adviser or
its affiliates with respect to the accounts as to which they exercise
investment discretion. In reaching such determination, the Adviser will
not be required to place or attempt to place a specific dollar value on
the brokerage and/or research services provided or being provided by such
broker-dealer. In demonstrating that such determinations were made in
good faith, the Adviser shall be prepared to show that all commissions
were allocated for purposes contemplated by this Agreement and that the
total commissions paid by the Trust over a representative period selected
by the Trust's trustees were reasonable in relation to the benefits to the
Trust.
(d) The Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate applicable to
any particular portfolio transactions or to select any broker-dealer on
the basis of its purported or "posted" commission rate but will, to the
best of its ability, endeavor to be aware of the current level of the
charges of eligible broker-dealers and to minimize the expense incurred
by the Trust for effecting its portfolio transactions to the extent
consistent with the interests and policies of the Trust as established by
the determinations of the Board of Trustees of the Trust and the
provisions of this paragraph 4.
(e) The Trust recognizes that an affiliated broker-dealer: (i)
may act as one of the Trust's regular brokers so long as it is lawful for
it so to act; (ii) may be a major recipient of brokerage commissions paid
by the Trust; and (iii) may effect portfolio transactions for the Trust
only if the commissions, fees or other remuneration received or to be
received by it are determined in accordance with procedures contemplated
by any rule, regulation or order adopted under the Investment Company Act
for determining the permissible level of such commissions.
(f) Subject to the foregoing provisions of this paragraph 4, the
Adviser may also consider sales of shares of the Trust and the other funds
advised by the Adviser and its affiliates as a factor in the selection of
broker-dealers for its portfolio transactions.
5. Compensation of the Adviser. The Trust agrees to pay the Adviser
and the Adviser agrees to accept as full compensation for all services
rendered by the Adviser as such, a fee payable weekly in an amount
computed by applying the annual rate of .65 of 1% to the end of week net
assets of the Trust, determined as of the close of business of the New
York Stock Exchange each Friday. When the New York Stock Exchange is not
open on a Friday, then the net assets shall be determined as of the close
of business of the New York Stock Exchange on the day on which the New
York Stock Exchange was open next preceding such Friday.
6. Use of Name. The Adviser hereby grants to the Trust a royalty-
free, non-exclusive license to use the name "Oppenheimer" in the name of
the Trust for the duration of this Agreement and any extensions or
renewals thereof. To the extent necessary to protect the Adviser's rights
to the name "Oppenheimer" under applicable law, such license shall allow
the Adviser to inspect and, subject to control by the Trust's Board,
control the nature and quality of services offered by the Trust under such
name. Such license may, upon termination of this Agreement, be terminated
by the Adviser, in which event the Trust shall promptly take whatever
action may be necessary to change its name and discontinue any further use
of the name "Oppenheimer" in the name of the Trust or otherwise. The name
"Oppenheimer" may be used or licensed by the Adviser in connection with
any of its activities, or licensed by the Adviser to any other party.
7. Duration and Termination.
(a) This Agreement will take effect on the date first set forth
above. This Agreement shall continue in effect until December 31, 1991,
and thereafter from year to year, so long as such continuance shall be
approved at least annually (a) by the Board of Trustees, including the
vote of a majority of the Trustees of the Trust who are not parties to
this Agreement or "interested persons" (as defined in the Investment
Company Act of 1940) of any such party cast in person at a meeting called
for the purpose of voting on such approval, or (b) by the vote of the
holders of a "majority" (as defined in the Investment Company Act) of the
outstanding voting securities of the Trust and by such aforementioned vote
of the Board of Trustees.
(b) This Agreement may be terminated by the Adviser at any time
without penalty upon sixty days' written notice to the Trust (which notice
may be waived by the Trust) and may be terminated by the Trust at any time
without penalty upon sixty days' notice to the Adviser (which notice may
be waived by the Adviser), provided that such termination by the Trust
shall be directed or approved by the vote of a majority of all the
Trustees of the Trust then in office or by the vote of the holders of a
"majority" (as defined in the Investment Company Act of 1940) of the
outstanding voting securities of the Trust. This Agreement shall
automatically terminate in the event of its assignment (as "assignment"
is defined in the Investment Company Act of 1940).
8. Liability.
(a) Provided that nothing herein shall be deemed to protect the
Adviser from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard of its obligations and
duties under this Agreement, the Adviser shall not be liable for any loss
sustained by reason of good faith errors or omissions in connection with
any matters to which this Agreement relates.
(b) The Adviser understands and agrees that the obligations of
the Trust under this Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the
Trust's property; the Adviser represents that it has notice of the
provisions of the Declaration of Trust of the Trust disclaiming Trustee
or shareholder liability for acts or obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers as of the day
and year first above written.
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Attest:
By: /s/ Robert G. Galli
------------------------
Robert G. Galli, Secretary
OPPENHEIMER MANAGEMENT CORPORATION
Attest:
By: /s/ Katherine P. Feld
----------------------
Katherine P. Feld
Vice President & Secretary
ADVISORY\680
ADMINISTRATION AGREEMENT
Agreement made as of , 1988, between
OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust
("Fund"), and MITCHELL HUTCHINS ASSET MANAGEMENT INC. a Delaware
corporation ("Mitchell Hutchins").
WHEREAS, the Fund intends to operate as a closed-end management
investment company, and is so registered under the Investment Company Act
of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund wishes to retain Mitchell Hutchins to provide
certain administrative services to the Fund, under the terms and
conditions stated below, and Mitchell Hutchins is willing to provide such
services for the compensation set forth below;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties agree as follows:
1. Appointment. The Fund hereby appoints Mitchell Hutchins as
administrator of the Fund, and Mitchell Hutchins accepts such appointment
and agrees that it will furnish the services set forth in paragraph 2
below.
2. Services and Duties of Mitchell Hutchins. Subject to the supervision
of the Fund's Board of Trustees ("Board"), Mitchell Hutchins will:
(a) Prepare all quarterly, semi-annual and annual reports required to be
sent to Fund shareholders, and arrange for the printing and dissemination
of such reports to shareholders;
(b) Assemble all reports required to be filed with the Securities and
Exchange Commission ("SEC") on Form N-SAR, or such other form as the SEC
may substitute for Form N-SAR, and file such completed from with the SEC;
(c) Review the provision of services by the Fund's independent
accountants, including but not limited to the examination by such
accountants of audited financial statements of the Fund and the review of
the Fund's federal, state, and local tax returns; and make such reports
and recommendations to the Board concerning the performance of the
independent accountants as the Board reasonably requests or it deems
appropriate;
(d) File with the appropriate authorities all required federal, state and
local tax returns;
(e) Arrange for the dissemination to shareholders of the Fund's proxy
materials and oversee the tabulation of proxies by the Fund's transfer
agent;
(f) Negotiate the terms and conditions under which custodian services
will be provided to the Fund and the fees to be paid by the Fund to its
custodian (which may or may not be an affiliate of the Fund's investment
adviser), in connection therewith;
(g) Recommend an accounting agent (which may or may not be the same party
as the Fund's custodian or an affiliate of the Fund's custodian) to the
Board, which agent would be responsible for computing the Fund's net asset
value in accordance with the Fund's registration statement under the 1940
Act and Securities Act of 1933, as amended; negotiate the terms and
conditions under which such accounting agent would compute the Fund's net
asset value, and the fees to be paid by the Fund in connection therewith;
review the provision of such accounting services to the Fund; and make
such reports and recommendations to the Board concerning the provision of
such services as the Board reasonably requests or it deems appropriate;
(h) Negotiate the terms and conditions under which transfer agency and
dividend disbursing services will be provided to the Fund, and the fees
to be paid by the Fund in connection therewith; review the provision of
transfer agency and dividend disbursing services to the Fund; and make
such reports and recommendations to the Board concerning the performance
of the Fund's transfer and dividend disbursing agent as the Board
reasonably requests or it deems appropriate;
(i) Establish the accounting policies of the Fund; reconcile accounting
issues which may arise with respect to the Fund's operations; and consult
with the Fund's (executive) officers, independent accountants, legal
counsel, custodian, accounting agent and transfer and dividend disbursing
agent as necessary in connection therewith;
(j) Determine the amounts available for distribution as dividends and
distributions to be paid by the Fund to its shareholders; prepare and
arrange for the printing of dividend notices to shareholders; and arrange
for the printing of dividend notices to shareholders; and provide the
Fund's transfer and dividend disbursing agent and custodian with such
information as is required for such parties to effect the payment of
dividends and distributions and to implement the Fund's dividend
reinvestment plan;
(k) Review the Fund's bills and authorize payments of such bills by the
Fund's custodian; and
(l) If requested by the Board, designate one or more of its employees to
serve as treasurer or assistant treasurer(s) of the Fund, and such
person(s) shall not be compensated by the Fund for so serving.
3. Public Inquiries. The Fund and Mitchell Hutchins agree that Mitchell
Hutchins will not be responsible for replying to questions or requests for
information concerning the Fund from shareholders, brokers or the public.
The Fund will inform Mitchell Hutchins of the party or parties to whom any
such questions or requests should be directed, and Mitchell Hutchins will
refer such questions and requests to such party or parties.
4. Compliance with the Fund's Governing Documents and Applicable Law.
In all matters relating to the performance of this Agreement, Mitchell
Hutchins will act in conformity with the Declaration of Trust, By-Laws
and registration statement of the Fund and with the directions of the
Board and Fund executive officers and will conform to and comply with the
requirements of the 1940 Act and all other applicable federal and state
laws and regulations.
5. Services Not Exclusive. Mitchell Hutchins' services hereunder are not
deemed to be exclusive, and Mitchell Hutchins is free to render
administrative or other services under this Agreement are not impaired
thereby.
6. Expenses. During the term of this Agreement, Mitchell Hutchins will
pay all expenses incurred by it in connection with its services under this
Agreement.
7. Compensation. For the services provided and expenses assumed by
Mitchell Hutchins under this Agreement, the Fund will pay Mitchell
Hutchins a fee, calculated and paid weekly, at the annual rate of .20% of
the Fund's net assets at the end of that week.
8. Limitation of Liability of Mitchell Hutchins. Mitchell Hutchins will
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund or its shareholders in connection with the
performance of its duties under this Agreement, except a loss resulting
from willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its duties
under this Agreement.
9. Limitation of Liability of the Trustees and Shareholders of the Fund.
Neither the Trustees of the Fund nor the shareholders of the Fund shall
be liable for any obligations of the Fund under this Agreement, and
Mitchell Hutchins agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Fund
in settlement of such right or claim, and not to such Trustees or
shareholders. Mitchell Hutchins represents that it has notice of the
provisions of the Declaration of Trust of the Fund disclaiming shareholder
liability for acts or omissions of the Fund.
10. Duration and Termination. This Agreement will become effective upon
the date hereabove written and shall continue in effect thereafter until
terminated without penalty by Mitchell Hutchins or the Fund upon 30 days'
written notice to the other and shall automatically terminate in the event
of its assignment as that term is defined in the 1940 Act.
11. Amendment to this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
12. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the 1940 Act; provided, however,
that paragraph 9 above will be construed in accordance with the laws of
the Commonwealth of Massachusetts conflict with the applicable provisions
of the 1940 Act, the latter shall control.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
14. Representation of Mitchell Hutchins. Mitchell Hutchins represents to
the Fund as follows:
(a) Mitchell Hutchins has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the
State of Delaware, in duly qualified as a foreign corporation
and in good standing in each other jurisdiction in which its
ownership of property or its conduct of business requires
such
qualification and in which the failure to qualify would
have a
material adverse effect on the business or operations of
Mitchell Hutchins and has full power and authority to conduct
its business as Administrator of Investment Companies;
(b) The Administration Agreement has been duly and validly
authorized, executed and delivered by Mitchell Hutchins,
complies with all applicable provisions of the Investment
Company Act and the Investment Company Act Rules and
constitutes
a legal, valid and binding obligation of Mitchell Hutchins
enforceable in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, reorganization
insolvency
or other similar laws relating to or affecting creditors'
rights
generally; and
(c) Neither the execution and delivery of the Administration
Agreement nor the consummation by Mitchell Hutchins of the
transactions contemplated by the Administration Agreement
conflicts with, or results in a breach of, the charter or By-
laws of Mitchell Hutchins or nay agreement or o instrument to
which Mitchell Hutchins is a party or by which Mitchell
Hutchins
is bound, andy law, rule, regulation, order or nay court,
governmental instrumentality, securities exchange or
association
or arbitrator.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year
first above written.
Attest: OPPENHEIMER MULTI-SECTOR INCOME TRUST
y:
Attest: MITCHELL HUTCHINS ASSET
MANAGEMENT INC.
By:
OFMI\680#2
28,000 Shares*
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Beneficial Interest
Underwriting Agreement
March 24, 1988
New York, New York
PAINEWEBBER INCORPORATED
THOMSON MCKINNON SECURITIES INC.
ADVEST, INC.
INTERSTATE SECURITIES CORPORATION
RAYMOND JAMES & ASSOCIATES, INC.
As Representatives of the Underwriters
In care of PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
Oppenheimer Multi-Sector Income Trust (the "Company") proposes to
issue and sell to you and the other underwriters named in Schedule 1 (the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"), 28,000,000 shares (the "Firm Shares") of its shares
of beneficial interest, par value $.01 per share (the"Common Stock"). In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional 4,200,000 shares (the "Option Shares") of
such Common Stock. All or part, as the context may require, of the Firm
Shares and the Option Shares are called the "Shares." Oppenheimer
Management Corporation, a Colorado corporation (the "Investment Adviser"),
will be the Company's investment adviser. The Company and the Investment
Adviser agree with you as follows:
1. Sales and Purchase. (a) The Company will issue and sell to each
Underwriter, and each Underwriter will purchase form the Company, the
number of Firm Shares opposite such Underwriter's name in Schedule I, at
the purchase price of $11.16 per share.
(b) The Company grants to the Underwriters an option to purchase all
or any part of the Option Shares for the same consideration per share as
for the Firm Shares. The number of Option Shares to be purchased by each
Underwriter will be the same percentage (adjusted by Representatives to
eliminate fractions) of the number of Option Shares being sold as such
Underwriter is obligated to purchase of the Firm Shares. Such option may
be exercised only to cover over-allotments in the sales of the Firm Shares
by the Underwriters and may be exercised in whole or in part, at any time
within 30 days after the date of this Agreement, by notice (the "Option
- ----------------------
* Plus an option to purchase up to 4,200,000 additional shares to cover
over-allotments.
Shares Notice") from Representatives to the Company no later than 12:00
noon, New York City time, at least two and not more than five business
days before the date specified for closing in the Option Shares Notice
("Option Shares Closing Date") setting forth the number of Option Shares
to be purchased and the time and date of such purchase. Upon the Option
Shares Notice, the Company will issue and sell to each Underwriter, and
each Underwriter will purchase from the Company, the number of Option
Shares set forth in the Option Shares Notices.
(c) The Underwriters agree to pay Oppenheimer Fund Management, Inc.
("OFM"), a subsidiary of the Investment Adviser, $.03 per share for
assistance in the distribution of the Shares. Payment shall be made by
certified or official bank checks payable in New York Clearing House
(next-day) funds to OFM on the Closing Date (as defined below) or in the
case of the Option Shares, as soon as practicable thereafter.
(d) The obligations of the Underwriters under this Agreement are
several and not joint and are undertaken on the basis of the
representations and are subject to the conditions in this Agreement.
2. Payment and Delivery. Delivery by the Company of the Firm Shares
(the "Firm Shares Closing") to the Representatives for the accounts of the
Underwriters against payment of the purchase price by one or more
certified or official bank check or checks payable in New York Clearing
House (next-day) funds to the Company for the Firm Shares, will take place
at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue,
New York, New York, at 10:00 a.m., New York city time, on the fifth
business day following the date of this Agreement, or at such time on such
other date, not later than 7 business days after the date of this
Agreement, as may be agreed on by the Company and the Representatives (the
"Firm Shares Closing Date").
To the extent the option with respect to the Option Shares is
exercised, delivery of the Option Shares against payment by the
Underwriters (in the manner specified above will take place at the offices
specified above for the Firm Shares Closing Date at the time and date
(which may be the Firm Shares Closing Date) specified in the Option Shares
Notice. The Firm Shares Closing Date and the Option Shares Closing Date
are called the "Closing Dates."
Certificates evidencing the Shares will be in definitive form,
registered in such names and be in such denominations as the
Representatives request (a) at least three full business days before the
Firm Shares Closing Date or (b) in the case of Option Shares, on the day
of the Option Shares Notice and will be made available to the
Representatives for checking and packaging, at a place in New York City
designated by the Representatives, at least one full business day before
the relevant Closing Date.
3. Registration Statement and Prospectus; Public Offering. The
Company has filed with the Securities and Exchange Commission (the
"Commission"), pursuant to the Securities Act of 1933 (the "Securities
Act"), the Investment Company Act of 1940 (the "Investment Company Act")
and the published rules and regulations adopted by the Commission under
the Securities Act (the "Securities Act Rules") and the Investment Company
Act (the "Investment Company Act Rules"), a notification of registration
on Form N-8A (the "Notification") and a registration statement on Form N-
2, including a preliminary prospectus, relating to the Shares, and such
amendments to such registration statement as may have been required to the
date of this Agreement. The term "preliminary prospectus" means any
preliminary prospectus as referred to in Rule 430 or 430A of the
Securities Act Rules included at any time as a part the registration
statement. The Company has furnished the Representatives copies of such
registration statement, each amendment to it filed by the Company with the
Commission and each preliminary prospectus filed by the Company with the
Commission or used by the Company. If such registration statement has not
become effective, a further amendment (the "Final Amendment") to such
registration statement, including a form of final prospectus, necessary
to permit such registration to become effective will promptly be filed by
the Company with the Commission. If such registration statement has
become effective, a final prospectus (the "Rule 430A Prospectus")
containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Securities Act Rules will be promptly
filed by the Company with the Commission in accordance with Rule 497 of
the Securities Act Rules. The registration statement as amended at the
time it becomes or became effective (the "Effective Date"), including
financial statements and all exhibits and any information deemed to be
included by Rule 430A, is called the "Registration Statement." The term
"Prospectus" means the prospectus as first filed with the Commission
pursuant to Rule 497 of the Securities Act Rules or, if no such filing is
required, the form of final prospectus included in the Registration
Statement at the Effective Date.
The Company understands that the Underwriters propose to make a
public offering of the Shares, as described in the Prospectus, as soon
after the Effective Date (or, if later, after the date this Agreement is
signed) as the Representative deem advisable. The Company confirms that
the Underwriters and dealers have been authorized to distribute each
preliminary prospectus and are authorized to distribute the Prospectus and
any amendments or supplements to it except that the Underwriters and
dealers are only authorized to distribute the Prospectus or any amendments
or supplements to it only until the Prospectus is amended and
supplemented, after which the Underwriters or dealers shall deliver the
amended or supplemented Prospectus.
4. Representations and Warranties. (a) The Company represents to
each Underwriter as follows:
(i) On the Effective Date and the date the Prospectus is first filed
with the Commission pursuant to Rule 497 (if required), when any post-
effective amendment to the Registration Statement (except any
posteffective amendment required by Rule 8b-16 of the Investment Company
Act which is filed with the Commission after the later of one year from
the date of this Agreement or the date on which the distribution of the
Shares is completed) becomes effective or any amendment or supplement to
the Prospectus is filed with the Commission and at each Closing Date, the
Registration Statement, the Prospectus and any such amendment or
supplement and the Notification did or will comply in all material
respects with the requirements of the Securities Act, the Investment
Company Act, the Securities Act Rules and the Investment Company Act
Rules. On the Effective Date and when any posteffective amendment to the
Registration Statement (except any posteffective amendment required by
Rule 8b-16 of the Investment Company Act which is filed with the
Commission after the later of one year from the date of this Agreement or
the date on which the distribution of the Shares is completed) becomes
effective, no part of the Registration Statement, the Prospectus or any
such amendment or supplement did or will contain any untrue statement of
a material fact or omit to a state a material fact required to be stated
in it or necessary to make the statements in it not misleading. At the
Effective Date, the date the Prospectus or any amendment or supplement to
the Prospectus is filed with the Commission and at each Closing Date, the
Prospectus did or will no contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements in it,
in light of the circumstances under which they were made, not misleading.
The foregoing representations do not apply to statements or omissions made
in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representatives on
behalf of such Underwriter expressly for use in the Registration
Statement, Prospectus, amendment or supplement.
(ii) The Company has been duly organized and is validly existing as
a business trust in good standing under the laws of the Commonwealth of
Massachusetts and is duly qualified as a foreign entity and in good
standing in each state of the United States of America in which its
ownership of property or conduct of its business requires such
qualification and in which the failure to qualify would have a material
adverse effect on its business or operations. The Company has full power
and authority to own its properties and conduct its business as described
in the Registration Statement.
(iii) The authorized shares of beneficial interest of the Company are
as described in the Prospectus. The shares of beneficial interest of the
Company conform in all material respects to the description of them in the
Prospectus insofar as such statements are legal matters. Proper
proceedings have been taken validly to authorize the outstanding shares
of beneficial interest (including the Shares, when delivered to and paid
for by the Underwriters as provided in the Agreement) have been duly and
validly issued and are fully paid and nonassessable. The holders of
outstanding shares of beneficial interest of the Company are not entitled
to any preemptive or other similar rights.
(iv) The Registration Statement and the Prospectus comply as to form
in all material respects with the requirements of the Securities Act, the
Investment Company Act, the Securities Act Rules and the Investment
Company Act Rules.
(v) The Agreement has been duly authorized, executed and delivered
by the Company and complies with all applicable provisions of the
Investment Company Act and the Investment Company Act Rules.
(vi) Each of the Advisory Agreement, the Administration Agreement (as
defined in the Prospectus) and the Custodian Agreement (as so defined) (i)
has been duly and validly authorized, executed and delivered by the
Company, (ii) complies with all applicable provisions of the Investment
Company Act and the Investment Company Act Rules and (iii) constitutes the
legal, valid and binding obligations of the Company enforceable in
accordance with its terms, subject, as to enforcement, to applicable
bankruptcy, reorganization, insolvency or other similar laws relating to
or affecting creditors' rights generally and to termination under the
Investment Company Act.
(vii) None of (i) the execution and delivery of he Agreement, the
Advisory Agreement, the Administration Agreement or the Custodian
Agreement by the Company, (ii) the issue and sale by the Company of the
Shares sold by the Company as contemplated by the Agreement and (iii) the
consummation by the Company of the other transactions contemplated by such
agreements conflicts with, or results in a breach of, the declaration of
trust or by-laws of the Company or any agreement or instrument to which
the Company is a party or by which the Company is bound, any law or
regulation or any order or regulation of any court, governmental
instrumentality or arbitrator.
(viii) The Company is not currently in breach of, or in default
under, any material written agreement or instrument to which it is a party
or by which it or its property is bound or affected.
(ix) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.
(x) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Company of the transactions contemplated in the Agreement, the Advisory
Agreement, the Administration Agreement or the Custodian Agreement, except
such as have been obtained under the Securities Act, the Investment
Company Act, the Securities Act Rules and the Investment Company Act Rules
and such as may be required under state securities or blue sky laws or the
National Association of Securities Dealers, Inc. in connection with the
purchase and distribution of the Shares by the Underwriters.
(xi) The Shares are duly authorized for listing, subject to official
notice of issuance, on the New York Stock Exchange.
(xii) The Company is duly registered with the Commission under the
Investment Company Act as a closed-end diversified management investment
company, and all required action has been taken by the Company under the
Securities Act and the Investment Company Act to make the public offering
and consummate the sale of the Shares as provided in the Agreement.
(xiii) Arthur Young & Company, whose report appears in the
Prospectus, are independent public accountants with respect to the Company
and the Investment Adviser, as required by the Securities Act and the
Securities Act Rules.
(b) The Investment Adviser represents to each Underwriter as follows:
(i) The Investment Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 (the "Advisers Act") and is not
prohibited by the Advisers Act, the Investment Company Act, the published
rules and regulations adopted by the Commission under the Advisers Act
(the "Advisers Act Rules") or the Investment Company Act Rules from acting
as an investment adviser for the Company under the Advisory Agreement (as
defined in the prospectus) as contemplated by the Prospectus.
(ii) The Investment Adviser has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Colorado, is duly qualified as a foreign corporation and in good standing
in each other jurisdiction in which its ownership of property or its
conduct of business requires such qualification and in which the failure
to qualify would have a material adverse effect on the business or
operations of the Investment Adviser and has full power and authority to
conduct its business as described in the Registration Statement.
(iii) The Agreement has been duly and validly authorized, executed
and delivered by the Investment Adviser and complies with all applicable
provisions of the Investment Company Act and the Investment Company Act
Rules.
(iv) The Advisory Agreement has been duly and validly authorized,
executed and delivered by the Investment Adviser, complies with all
applicable provisions of the Investment Company Act and the Investment
Company Act Rules and constitutes a legal, valid and binding obligation
of the Investment Adviser enforceable in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, reorganization,
insolvency or other similar laws relating to or affecting creditors'
rights generally and to termination under the Investment Company Act.
(v) Neither the execution and delivery of the Agreement nor the
Advisory Agreement no the consummation by the Investment Adviser of the
transactions contemplated by the Agreement or the Advisory Agreement
conflicts with, or results in a breach of, the charter or By-laws of the
Investment Adviser or any agreement or instrument to which the Investment
Adviser is a party or by which the Investment Adviser is bound, any law,
rule, regulation, order of any court, governmental instrumentality,
securities exchange or association or arbitrator.
(vi) The description of the Investment Adviser in the Prospectus does
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated in it or necessary in order to make
the statements in it not misleading.
5. Agreements of the Company. (a) If the Registration Statement has
not yet become effective, the Company will promptly file the Final
Amendment with the Commission, will use its best efforts to cause the
Registration Statement to become effective and, as soon as the Company is
advised, will advise the Representatives when the Registration Statement
or any amendment to it has become effective. If the Registration
Statement has become effective, the Company will file the 430A Prospectus
as promptly as practicable, but no later than the second business day
following the date of this Agreement, and will provide the Representatives
satisfactory evidence of the filing. The Company will not file any
prospectuses or nay other amendment (except any posteffective amendment
required by Rule 8b-16 of the Investment Company Act which is filed with
the Commission after the later of one year from the date of this Agreement
or the date on which the distribution of the Shares is completed) or
supplement to the Registration Statement or Prospectus unless a copy has
first been submitted to the Representatives a reasonable time before its
filing and the Representatives of their counsel have not reasonably
objected to it within a reasonable time after receiving the copy.
(b) The Company will advise the Representatives (1) of the issuance
by the Commission of any order in respect of the Company, or if respect
of the Investment Adviser which relates to the Company, (2) of the
initiation or threatening of any proceedings for, or receipt by the
Company of any notice with respect to, suspension of the qualification of
the Shares for sale in any jurisdiction or the issuance of any order by
the Commission suspending the effectiveness for the Registration Statement
and (3) of receipt by the Company or any representative or attorney of the
Company or any other communication from the Commission relating to the
Company, the Registration Statement, the Notification, any preliminary
prospectus, the Prospectus or to the transactions contemplated by this
Agreement. The Company will make every reasonable effort to prevent the
issuance of an order suspending the effectiveness of the Registration
Statement and, if any such order is issued, to obtain its lifting as soon
as possible.
(c) The Company will deliver to each Representative, without charge,
a signed copy of the Registration Statement and the Notification and of
any amendments (except any posteffective amendment required by Rule 8b-16
of the Investment Company Act which is filed with the Commission after the
later of one year from the date of this Agreement or the date on which the
distribution of the Shares is completed) to either of them ( including all
exhibits filed with any such document) and as many conformed copies of the
Registration Statement and of any amendments (except any posteffective
amendment required by Rule 8b-16 of the Investment Company Act which is
filed with the Commission after the later of one year from the date of
this Agreement or the date on which the distribution of the Shares is
completed) to it (excluding exhibits) as the Representatives may
reasonably request.
(d) During such period as a prospectus is required by law to be
delivered by an underwriter or a dealer, the Company will deliver without
charge, to the Representatives and to the Underwriters and dealers, at
such office or offices as the Representatives may designate, as many
copies of the Prospectus as the Representatives may reasonably request,
and, if any event occurs during such period as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements in it, in the light of the circumstances existing when the
Prospectus is delivered to a purchaser, not misleading in any material
respect, or during such period it is necessary to amend or supplement the
Prospectus to comply with the Securities Act, the Investment Company Act,
the Securities Act Rules or the Investment Company Act Rules, the Company
will promptly prepare, submit to the Representatives, file with the
Commission and deliver, without charge, to the Underwriters and to dealers
(whose names and addresses the Representatives will furnish to the
Company) to whom Shares have been sold by the Underwriters and to other
dealers on request, amendments or supplements to the Prospectus (except
that if the amendment or supplement is filed as a result of a misstatement
or omission by the Underwriters, then the Company may deliver such
amendments or supplements to the Underwriters at a reasonable charge) so
that the statements in the Prospectus, as so amended or supplemented, will
not, in the light of the circumstances existing when the Prospectus is
delivered to a purchaser, be misleading in any material respect and will
comply with the Securities Act, the Investment Company Act, the Securities
Act Rules and the Investment Company Act Rules. Delivery by Underwriters
of any such amendments or supplements to the prospectus will not
constitute a waiver of any of the conditions in Section 6.
(e) The Company will make generally available to the Company's
security holders, as soon as practicable but in no event later than the
last day of the 18th full calendar month following the calendar quarter
in which the Effective Date falls, an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 of the
Securities Act Rules.
(f) The Company will take such actions as the Representatives
reasonably request in order to qualify the Shares for offer and sale under
the securities or "blue sky" laws of such jurisdictions as the
Representatives reasonably designate except that the Company shall not be
required in connection therewith or as a condition thereof to qualify as
a foreign corporation or to execute a general consent to service of
process in any state.
(g) The Company will pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, all costs and
expenses incident to the performance of the obligations of the Company
under this Agreement, including but not limited to costs and expenses of
or relating to (1) the preparation, printing and filing of the
Registration Statement and exhibits to it, each preliminary prospectus,
the Prospectus, all amendments and supplements to the Registration
Statement and the Prospectus, and the printing or other reproduction of
this Agreement and any other underwriting documents, (2) the issuance of
the Shares and the preparation and delivery of certificates for the
Shares, (3) the registration or qualification of the Shares for offer and
sale under the securities or "blue sky" laws of the jurisdictions referred
to in the foregoing paragraph, including the reasonable fees and
disbursements of counsel for the Underwriters in that connection, and the
preparation and printing of preliminary and supplemental "blue sky"
memoranda, (4) the furnishing (including costs of shipping and mailing)
to the Underwriters and to dealers of copies of each preliminary
prospectus, the Prospectus, and all amendments or supplements to the
Prospectus,and of the other documents required by this Section to be so
furnished, (5) the filing requirements of the National Association of
Securities Dealers, Inc., in connection with its review of the financing,
(6) all transfer taxes, if any, with respect to the sale and delivery of
the Shares to the Underwriters, (7) the listing of the Shares on the New
York Stock Exchange and (8) the transfer agent for the Shares.
Notwithstanding the foregoing, the Underwriters agree to pay any expenses
(including fees and disbursements of counsel) incurred by the Underwriters
in connection with their investigation, preparing to market and marketing
of the Shares.
(h) Without the prior written consent of the Representatives, the
Company will not offer, sell or register with the Commission, or announce
an offering of, any equity securities issued by the Company, within 180
days after the Effective Date, except for the Shares.
6. Conditions of the Underwriters' Obligations. The obligations of
the Underwriters to purchase the Shares are subject to the accuracy on the
date of this Agreement and on each Closing Date, of the representations
and warranties of the Company and the Investment Adviser in this
Agreement, to the accuracy and completeness of all statements made by the
Company or the Investment Adviser, or any of their officers in certificate
delivered to the Representatives or their counsel pursuant to this
Agreement, to performance by the Company and the Investment Adviser of
their obligations under this Agreement and to each of the following
additional conditions:
(a) The Registration Statement must have become effective by 5:30
p.m., New York City time, on the date of this Agreement or such later
date and time as these Representatives consent to in writing. If
required, the Prospectus must have been filed in accordance with Rule
497 of the Securities Act Rules.
(b) No order suspending the effectiveness of the Registration
Statement may be in effect an no proceedings for such purpose may be
pending before or threatened by the Commission, and any requests for
additional information on the part of the Commission (to be included
in the Registration Statement or Prospectus otherwise) must be
complied with to the reasonable satisfaction of the Representatives
and their counsel.
(c) Since the dates as of which information is given in the
Registration Statement and Prospectus, (1) there must not have been
any material change (other than as a result of the Firm Shares
Closing) in the shares of beneficial interest or liabilities of the
Company, (2) there must not have been any material adverse change in
the general affairs, prospects, management, business, financial
condition or results of operations of the Company, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated by the Prospectus, (3) the Company
must not have sustained any material loss or interference with its
business from any court or legislative or other governmental action,
order or decree, or any other occurrence, not described in the
Prospectus, and (4) there must not have occurred any event, other
than events which result from actions taken by the Administrator or
the Underwriters, that makes untrue or incorrect in nay material
respect any statement or information contained in the Prospectus or
that is not reflected in the Prospectus but should be reflected in
it in order to make the statements or information in it not
misleading in any material respect,if, in the judgment of the
Representatives, any such development referred to in clause (1), (2),
(3), or (4) makes it impracticable or inadvisable to consummate the
sale and delivery of the Shares by the Underwriters at the initial
public offering price.
(d) The Representatives must have received on the date of this
Agreement certificates, dated such date, of the chief executive or
operating officer and the chief financial or accounting officer of
each of the Company and the Investment Adviser certifying that (1)
the signers have examined the Registration Statement, the Prospectus
and this Agreement, (2) the representations and warranties of the
Company and the Investment Adviser in this Agreement are accurate
on and as of the date of the certificate, (3) there has not been any
material adverse change in the general affairs, prospects,
management, business, financial condition or results of operations
oft he Company, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated
by the Prospectus, and (4) to the knowledge of such officers, no
actions to delay the effectiveness of the Registration Statement, to
prohibit the sale of Shares or having or which may have any material
adverse effect on the Investment Adviser have been taken or
threatened by the Commission. The Representatives must receive on
each Closing Date certificates, dated such Closing Date, of such
officers certifying to the effect set forth in (1), (2), and that (1)
to the knowledge of such officers, no order suspending the
effectiveness of the Registration Statement, prohibiting the sale of
the Shares or having a material adverse effect on the Investment
Adviser has been issued and no proceedings for any such purpose are
pending before or threatened by the Commission and (2) each of the
Company and the Adviser has performed all agreements that this
Agreement requires it to perform by such Closing Date.
(e) The Representatives must receive on each Closing Date the
opinions dated such Closing Date substantially in the form of Annex
A to this Agreement from Gordon Hurwitz Butowsky Weitzen Shavlov &
Wein.
(f) The Representatives must receive on each Closing Date, the
opinions dated such Closing Date substantially in the form of Annex
C to this Agreement from Robert G. Galli, Esq., Executive Vice
President and General Counsel of the Investment Adviser.
(g) The Representatives must receive on Closing Date from Sadden,
Arps, Slate, Meagher & Flom, their counsel, an opinion dated such
Closing Date with respect to the Company, the Shares, the
Registration Statement and the Prospectus, this Agreement and the
form and sufficiency of all proceedings taken in connection with the
sale and delivery of the Shares. Such opinion and proceedings shall
be satisfactory in all respects to the Representatives. The Company
and the Investment Adviser must have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling
them to render such opinion.
(h) The Representatives must receive by 1:00 p.m. on the date this
Agreement is signed and delivered by the Representatives a signed
letter, dated such date, substantially in the form of Annex B to this
Agreement from the firm of accountants designated in such Annex. The
Representatives must also receive on each Closing Date a signed
letter form such accountants, dated such Closing Date, confirming on
the basis of a review in accordance with the procedures set forth in
their earlier letter that nothing has come to their attention during
the period from a date not more than five business days before the
date of this Agreement, specified in the letter, to a date not more
than five business days before such Closing Date that would require
any change in their letter referred to in the foregoing sentence.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement will comply with this agreement only if they
are in the form and scope previously agreed to or satisfactory to the
Representatives and counsel for the Representatives.
7. Indemnification. (a) Each of the Company and the Investment
Adviser, jointly and severally will indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each
Underwriter and each person, if any, who controls each Underwriter within
the meaning of Section 15 of the Securities Act against any and all
losses, claims, damages and liabilities, join or several (including any
investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of , any action, suit or
proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act, the Investment
Company Act, the Advisers Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based on any untrue statement
or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus, or
the omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading, provided that the Company and the Investment Adviser will not
be liable to the extent that such loss, claim, damage, or liability arises
from the sale of the Shares in the public offering to any person by an
Underwriter and is abased on an untrue statement or omission or alleged
untrue statement or omission (1) made in reliance on and in conformity
with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter expressly for use in the
document, (2) made in reliance on and in conformity with the information
furnished in writing to the Company by the Administrator expressly for use
in the document or (3) in a preliminary prospectus if the Prospectus
corrects the untrue statement or omission or alleged untrue statement or
omission that is the basis of the loss, claim, damage or liability for
which indemnification is sought and a copy of the Prospectus was not sent
or given to such person at or before the confirmation of the sale to such
person in any case where such delivery is required by the Securities Act,
unless such failure to deliver the Prospectus was a result of
noncompliance by the Company with section 5(d). This indemnity agreement
will be in addition to any liability that the Company or the Investment
Adviser might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company,
the Investment Adviser, each person, if any, who controls the Company or
the Investment Adviser within the meaning of Section 15 of the Securities
Act, each director of the Company and each officer of the Company who
signs the Registration Statement to the same extent as the foregoing
indemnity from the Company and the Investment Adviser to each Underwriter,
but only insofar as losses, claims, damages or liabilities arise out of
or are based on any untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with
information furnished in writing to the Company by the Representatives on
behalf of such Underwriter expressly for use in preparation of the
documents in which the statement or omission is made or alleged to be
made. The Company and the Investment Adviser acknowledge that the
statements under the caption "Underwriting" in, any preliminary prospectus
and the Prospectus constitute the only information furnished in writing
to the Company by the Representatives on behalf of the Underwriters
expressly for use in any such document, and the Underwriters confirm that
such statements are correct. This indemnity will be in addition to any
liability that each Underwriter might otherwise have.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim is to be made
against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying
party will not relieve it from any liability that it may have to any
indemnified party otherwise than under this Section. If any such action
is brought against any indemnified party and it notifies the indemnifying
party of its commencement, the indemnifying party will be entitled to
participate in, and, to the extent that it elects by delivering written
notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any
other indemnifying party similarly notified, to assume the defense of the
action, with counsel satisfactory to the indemnified party, and after
notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable
to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the
defense. The indemnified party will have the right to employ its counsel
in any such action, but the fees and expenses of such counsel will be at
the expense of such indemnified party unless (1) the employment of counsel
by the indemnified party has been authorized in writing by the
indemnifying party, (2) the indemnified party has reasonably concluded
that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified
party) or (3) the indemnifying party has not in fact employed counsel to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action, in each of which cases the
reasonable fees and expenses of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying
party or parties shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm at any one time for all such
indemnified party or parties. All such fees and expenses will be
reimbursed promptly as they are incurred. An indemnifying party will not
be liable for any settlement of any action or claim effected without its
written consent or, in connection with any proceeding or related
proceeding in the same jurisdiction, for the fees and expenses of more
than one separate counsel for all indemnified parties.
(d) The indemnity agreements contained in this Paragraph and the
representations, warranties and agreements of the Company and the
Investment Adviser in Paragraph 4 and Paragraph 5 hereof shall survive the
delivery of the Shares and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any indemnified party.
(e) Notwithstanding the foregoing, neither the Investment Adviser nor
the Representatives shall be entitled to indemnification from the Company
or the Shareholders pursuant to this Agreement in the event such person
is found guilty of willful malfeasance, bad faith, or gross negligence,
in the performance of his duties, or by reason of such person's reckless
disregard of such person's obligations and duties under this Agreement.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in the foregoing Section 7 is applicable in accordance with its terms but
for any reason is held to be unavailable from the Company, the Investment
Adviser or the Underwriters, the Company, the Investment Adviser and the
Underwriters will contribute to the total losses, claims, damages and
liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement
of, any action or any claims asserted, but after deducting any
contribution received by the Company or the Investment Adviser from
persons other than the Underwriters, such as persons who control the
Company or the Investment Adviser within the meaning of the Securities
Act, officers of the Company who signed the Registration Statement and
directors of the Company, who may also be labile for contribution) to
which the Company or the Investment Adviser and any one or more of the
Underwriters may be subject in such proportion so that (i) the
Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover of the
Prospectus bears to the public offering price appearing on the cover, (ii)
and the Company and the Investment Adviser in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on
the one hand and the Investment Adviser on the other or (iii) if the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect no only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Investment Adviser on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations and the Investment Adviser with respect
to such offering, in each case. The relative fault shall be determined
by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
related to information supplied by the Company or the Investment Adviser,
the intent of the parties an their relative knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8 were to be
determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which
does not take into account the equitable considerations referred herein.
The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred
to above in this Section 8 shall be deemed to include, for purposes of
this Section 8, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise paid or become liable
to pay by reason of nay untrue or alleged untrue statement or omission or
alleged omission. The Underwriters' obligations to contribute as provided
in this Section 8 are several in proportion to their respective
underwriting obligations and not joint; provided that (1) no Underwriter
(except as may be provided in the Agreement Among Underwriters) will be
responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter, (2) no person
found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentations, and
(3) no person found guilty of willful malfeasance, bad faith, or gross
negligence,in the performance of such person's duties, or by reason of
such person's reckless disregard of his obligations and duties under this
Agreement shall be entitled to contribution from the Company or the
Shareholders. For purposes of this Section, any person who controls a
party to this Agreement within the meaning of the Securities Act will
have the same rights to contribution as that party, and each officer of
the Company who signed the Registration Statement and each director of the
Company will have the same rights to contribution as the Company, subject
in each case to clauses (1), (2) and (3) of this Section. Any party
entitled to contribution will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim
for contribution may be made under this Section, notify any such party or
parties from whom contribution may be sought, but the omission so to
notify will not relieve the party or parties from whom contribution may
be sought from any other obligation it or they may have otherwise than
under this Section. No party will be liable for contribution with respect
to any action or claim settled without its written consent.
9. Termination. This Agreement may be terminated by the
Representatives or by Underwriters who have agreed to purchase at least
50% of the Shares by notifying the Company at any time.
(a) before the later of the effectiveness of the Registration
Statement and the time when the Shares are first generally offered by the
Representatives to dealers by letter or telegram,
(b) at or before any Closing Date, if in the judgment of the
Representatives or in the judgment of such Underwriters payment for and
delivery of the Shares is rendered impracticable or inadvisable because
(1) trading in the equity securities of the Company is suspended by the
Commission, by an exchange that lists the Shares, or by the National
Association of Securities Dealers Automated Quotation Market System, (2)
additional material governmental restrictions,not in force on the date of
this Agreement, have been imposed upon trading in securities generally or
minimum or maximum prices have been generally established on the New York
Stock Exchange, or trading in securities generally has been suspended on
any such Exchange or a general banking moratorium has been established by
Federal or New York authorities, or (3) any outbreak or material
escalation of hostilities or other calamity or crisis occurs the effect
of which is such as to make it impracticable to market the Shares, or
(c) at or before the Closing Date, if any of the conditions
specified in Section 6 have not been fulfilled when and as required by
this Agreement.
If this Agreement is terminated pursuant to any of its provisions,
except as otherwise provided, no party will be under any liability to any
other party, except that (1) if this Agreement is terminated by the
Representatives or the Underwriters because of any failure or refusal on
the part of the Company or the Investment Adviser to comply with its terms
or because the conditions in Section 6 are not satisfied, the Company and
the Investment Adviser, jointly and severally, will reimburse the
Underwriters for all reasonable out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares and (2) no
Underwriter who has failed or refused to purchase the Shares agreed to be
purchased by it under this Agreement, will be relieved of liability to the
Company, the Investment Adviser or to the other Underwriters for damages
occasioned by its default.
10. Substitution of Underwriters. If one or more of the Underwriters
fails (other than for a reason sufficient to justify the termination of
this Agreement) to purchase on any Closing Date the Shares agreed to be
purchased on such Closing Date by such Underwriter or Underwriters, the
Representatives may find one or more substitute underwriters to purchase
such shares or make such other arrangements as the Representatives deem
advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement.
If no such arrangements have been made within 36 hours after such Closing
Date, and
(a) the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date does not exceed 10% of the Shares that
the Underwriters are obligated to purchase on such Closing Date, each of
the nondefaulting Underwriters will be obligated to purchase such Shares
on the terms set forth in this Agreement in proportion to their respective
obligations under this Agreement, or
(b) the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date exceeds 10% of the Shares to be
purchased by all the Underwriters on such Closing Date, the Company will
be entitled to an additional period of 24 hours within which to find one
or more substitute underwriters reasonably satisfactory to the
Representatives to purchase such Shares on the terms set forth in this
Agreement.
In any such case, either the Representatives or the Company will have
the right to postpone the applicable Closing Date for not more than five
business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus) may be effected by the Representatives and the Company. If
the number of Shares to be purchased on such Closing Date by such
defaulting Underwriter or Underwriters exceeds 10% of the Shares that the
Underwriters are obligated to purchase on such Closing Date, and none of
the nondefaulting Underwriters or the Company makes arrangements pursuant
to this Section within the period stated for the purchase of the Shares
that the defaulting Underwriters agreed to purchase, this Agreement will
terminate without liability on the part of any nondefaulting Underwriter
to the Company and without liability on the part of the Company, except
in both cases, as provided in Sections 5, 7, 8 and 9. This Section will
not affect the liability of any defaulting Underwriter to the Company or
the Investment Adviser or the nondefaulting Underwriters arising out of
such default. A substitute underwriter will become an Underwriter for all
purposes of this Agreement.
11. Miscellaneous. The reimbursement, indemnification and
contribution agreements in sections 5, 7, 8 and 9 of the representations
and agreements of the Company, the Investment Adviser and the Underwriters
in this Agreement will remain in full force and effect regardless of any
termination of this Agreement, any investigation made by or on behalf of
any Underwriter, the Company, the Investment Adviser or any controlling
person and delivery of and payment for the Shares.
This Agreement is for the benefit of the Underwriters, the Company
and the Investment Adviser and their successor and assigns, and, to the
extent expressed in this Agreement, for the benefit of persons controlling
any of the Underwriters, the Company or the Investment Adviser, and
directors and officers of the Company, and their respective successor and
assigns, and no other person, partnership, association or corporation will
acquire or have any right under or by virtue of this Agreement. The term
"successors and corporation will acquire or have any right under or by
virtue of this Agreement. The term "successor and assigns" does not
include any purchaser of Shares from any Underwriter merely because of
such purchase.
All notices and communications under this Agreement will be in
writing, effective only on receipt and mailed or delivered, by messenger,
facsimile transmission or otherwise, to the Representatives in care of
PaineWebber Incorporated at 1285 Avenue of the Americas, New York, New
York 10019, Attn: Equity Syndicate Department to the Company, to its
agent for service at such agent's address on the cover of the Registration
Statement and to the Investment Adviser at its address set forth in the
Prospectus.
Any action required or permitted to be taken by the Representatives
under this Agreement may be taken by them jointly or by PainWebber
Incorporated.
The Underwriters understand and agree that the obligations of the
Company under this Agreement are not binding upon any shareholder or
trustee of the Company personally, but bind only the Company and the
Company's property. The Underwriters acknowledge that they have notice
of the provisions of the Declaration of Trust of the Company disclaiming
shareholder and trustee liability for acts and obligations of the Company.
This Agreement may be signed in multiple counterparts that taken as
a whole constitute one agreement.
This Agreement will be governed by and construed in accordance with
the laws of the State of New York.
Please confirm that the foregoing correctly sets forth the agreement
between us.
Very truly yours,
OPPENHEIMER MULTI-SECTOR INCOME TRUST
By: /s/ Donald W. Spiro
-------------------------
Title: President
OPPENHEIMER MANAGEMENT CORPORATION,
By: /s/ Robert G. Zack
-------------------------
Title: Senior Vice President
CONFIRMED:
PAINEWEBBER INCORPORATED
THOMSON MCKINNON SECURITIES INC.
ADVEST, INC.
INTERSTATE SECURITIES CORPORATION
RAYMOND JAMES & ASSOCIATES, INC.
As Representatives of the Underwriters
In case of PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
By: PaineWebber Incorporated.
By:______________________
Title: Managing Director
Acting on behalf of itself and the Underwriters named in Schedule 1.
<PAGE>
SCHEDULE 1
Number of
Firm Shares
to be
Name Purchased
---- -----------
PaineWebber Incorporated 2,060,800
Thomson McKinnon Securities Inc. 2,060,800
Advest, Inc. 2,060,800
Interstate Securities Corporation 2,060,800
Raymond James & Associates, Inc. 2,060,800
Bear, Stearns & Co. Inc. 560,000
The First Boston Corporation 560,000
Alex, Brown & Sons Incorporated 560,000
Donaldson, Lufkin & Jenrette Securities Corporation 560,000
A.G. Edwards & Sons, Inc. 560,000
Prudential-Bache Securites Inc. 560,000
Salomon Brothers Inc. 560,000
Smith Barney, Harris Upham & Co. Incorporated 560,000
Dean Witter Reynolds Inc. 560,000
Robert W. Baird & Co. Incorporated 280,000
Bateman Eichler, Hill Richards Incorporated 280,000
William Blair & Company 280,000
Blunt Ellis & Loewi Incorporated 280,000
J.C. Bradford & Co. 280,000
Butcher & Singer Inc. 280,000
Cowen & Co. 280,000
Dain Bosworth Incorporated 280,000
First Albany Corporation 280,000
First of Michigan Corporation 280,000
Janney Montgomery Scott Inc. 280,000
Ladengurg, Thalmann & Co. Inc. 280,000
Legg Mason Wood Walder Incorporated 280,000
McDonald & Company Securities, Inc. 280,000
Morgan Keegan & Company, Inc. 280,000
Neuberger & Berman 280,000
Oppenheiemr & Co., Inc. 280,000
Piper, Jaffray & Hopwood Incorporated 280,000
Prescott, Ball & Turben, Inc. 280,000
The Robinson-Humphrey Company, Inc. 280,000
Rotan Mosle Inc. 280,000
Stifel, Nicolaus & Company, Incorporated 280,000
Sutro & Co. Incorporated 280,000
Tucker, Anthony & R.L. Day, Inc. 280,000
Wheat, First Securities, Inc. 280,000
Birr, Wilson Securities, Inc. 140,000
Boettcher & Company, Inc. 140,000
Carolina Securities Corporation 140,000
The Chicago Corporation 140,000
Crowell, Weedon & Co. 140,000
Doft & Co., Inc. 140,000
Eppler, Guerin & Turner, Inc. 140,000
Fahnestock & Co., Inc. 140,000
First Manhattan Co. 140,000
Furman Selz Mager Dietz & Birney Incorporated 140,000
Gruntal & Co., Incorporated 140,000
Howard, Weil, Labouisse, Friedrichs Incorporated 140,000
Johnson, Lane, Space, Smith & Co., Inc. 140,000
Johnston, Lemon & Co. Incorporated 140,000
Josephthal & Co., Incorporated 140,000
C.J. Lawrence, Morgan Grenfell Inc. 140,000
Mabon, Nugent & Co. 140,000
Morgan, Olmstead, Kennedy & Gardner Incorporated 140,000
Newhard, Cook & Co., Incorporated 140,000
The Ohio Company 140,000
Rauscher Pierce Refsnes, Inc. 140,000
Rodman & Renshaw, Inc. 140,000
Scott & Stringfellow, Inc. 140,000
Wedbush Securities, Inc. 140,000
Baker, Watts & Co. 56,000
George K. Baum & Company 56,000
Branch, Cabell and Company 56,000
Brean Murray, Foster Securities Inc. 56,000
JW Charles-Bush Securities, Inc. 56,000
B.C. Christopher Securities Co. 56,000
Craigie Incorporated 56,000
Culverwell & Co., Inc. 56,000
R.G. Dickinson & Co. 56,000
Dominick & Dominick, Inc. 56,000
First Equity Corporation of Florida 56,000
First Tryon Securities, Inc. 56,000
Fitzgerald, Dearman & Roberts Inc. 56,000
Hanifen, Imhoff Inc. 56,000
J.J.B. Hilliard, W.L. Lyons, Inc. 56,000
Howe, Barnes & Johnson, Inc. 56,000
Independence Securities Inc. 56,000
Jesup & Lamont Securities Co., Inc. 56,000
John G. Kinnard and Co., Inc. 56,000
Emmett A. Larkin Company, Inc. 56,000
Needham & Company, Inc. 56,000
W.H. Newbold's Son & Co., Inc. 56,000
David A. Noyes & Company 56,000
Parker/Hunter Incorporated 56,000
Philips, Appel & Walden, Inc. 56,000
Rowland, Simon & Co. 56,000
Seidler Amdec Securities Inc. 56,000
Smith, Hague & Co., Incorporated 56,000
Smith, Moore & Co. 56,000
Henry F. Swift & Co. 56,000
Allied Group Securities Corp. 28,000
American Securities Corporation 28,000
Arthurs, Lestrange & Company Incorporated 28,000
Barclay Investments, Inc. 28,000
Butler, Wick & Co., Inc. 28,000
Cleary Gull Reiland McDevitt & Collopy, Inc. 28,000
Cunningham, Schmertz & Co., Inc. 28,000
Davenport & Co. of Virginia, Inc. 28,000
Dorsey & Company Inc. 28,000
Evans & Co. Incorporated 28,000
Ferris & Company, Incorporated 28,000
First Affiliated Securities, Inc. 28,000
Gabelli & Company, Inc. 28,000
Hopper Soliday & Co., Inc. 28,000
Investment Corporation of Virginia 28,000
Kuhns Brothers & Laidlaw, Inc. 28,000
Oberweis Securities, Inc. 28,000
The Pinnacle Group 28,000
Private Ledger Securities, Inc. 28,000
Southwest Securities Inc. 28,000
Edward A. Viner & Co., Inc. 28,000
Young, Smith & Peacock, Inc. 28,000
------
Total 28,000,000
<PAGE>
ANNEX A
OPINION OF GORDON HURWITZ BUTOWSKY WEITZEN SHALOV & WEIN
1. Oppenheimer Multi-Sector Income Trust (the "Company") has been
duly organized and is validly existing as a business trust in good
standing under the laws of the Commonwealth of Massachusetts and is duly
qualified as a foreign entity and in good standing in each state of the
United States of America in which its ownership or leasing of property
requires such qualification and in which the failure to qualify would have
a material adverse effect on its business or operations. The Company has
full corporate power and authority to won its properties and conduct its
business as described in the Registration Statement.
2. The authorized shares of beneficial interest of the Company are
as described in the Prospectus. The shares of beneficial interest of the
Company conform in all material respects to the description of them in the
Prospectus insofar as such statements are legal matters. Proper
proceedings have been taken to validly issue and authorize the outstanding
shares of such shares of beneficial interest (including the Shares being
issued). All the outstanding shares of beneficial interest (including the
Shares, when delivered to and paid for by the Underwriters as provided in
the Agreement) have been duly and validly issued and are fully paid and
nonassessable. The holders of outstanding shares of beneficial interest
of the Company are not entitled to any preemptive or other similar rights.
3. The Registration Statement has become effective under the
Securities Act and, to the best of our knowledge, no stop order suspending
the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus is in effect, and no proceedings for
that purpose have been instituted or are pending or contemplated by the
Commission. Any required filing of the Prospectus or any supplements to
it have been made in accordance with Rule 497 of the Securities Act Rules.
4. The Registration Statement and the Prospectus (except as to the
financial statements contained in them, as to which we express no opinion)
comply as to form in all material respects with the requirements of the
Securities Act, the Investment Company Act, the Securities Act Rules and
the Investment Company Act Rules.
5. We have no reason to believe that the Registration Statement or
any amendment to it at the time it became effective, or as of the Closing
Date contained any untrue statement of a material fact or omitted to state
any material fact required to be stated in it or necessary in order to
make the statements in it not misleading or that the Prospectus, as
amended or supplemented, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the
statements in it, in light of the circumstances under which they were
made, not misleading.
6. To the best of our knowledge, there are no franchises, contracts
or other documents or any pending or threatened proceedings, legal or
otherwise, before any court, governmental body or arbitrator, that are of
a character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement and
that are not adequately described or filed as required.
7. The Agreement has been duly authorized, signed and delivered by
the Company and complies with all applicable provisions of the Investment
Company Act Rules.
8. Each of the Advisory Agreement, the Administration Agreement (as
defined in the Prospectus) and the Custodian Agreement (as so defined) (i)
has been duly and validly authorized, signed and delivered by the Company,
(ii) complies with all applicable provisions of the Investment Company Act
Rules and (iii) constitutes the legal, valid and binding obligations of
the Company enforceable in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, reorganization, insolvency or other
similar laws relating to or affecting creditors' rights generally and to
termination under the Investment Company Act.
9. None of (i) the execution and delivery of the Agreement, the
Advisory Agreement, the Administrative Agreement or the Custodian
Agreement, (ii) the issue and sale by the Company of the Shares sold by
the Company as contemplated by the agreement and (iii) the consummation
in the Company of the other transactions contemplated by such agreements
conflicts with, or results in a breach of, the declaration of trust or by-
laws of the Company or any agreement or instrument known to us to which
the Company is a party or by which the Company is bound, any law or
regulation or, so far as is known to us, any order to regulation of any
court, governmental instrumentality or arbitrator.
10. To the best of our knowledge, the Company is not currently in
breach of, or in default under, any material written agreement or
instrument to which it is a party or by which it or its property is bound
or affected.
11. To the best of our knowledge, no holder of securities of the
Company has rights to the registration of any securities of the Company
because of the filing of the Registration Statement.
12. No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated in the Agreement, the Advisory Agreement, the
Administration Agreement or the Custodian Agreement, except such as have
been obtained under the Securities Act, the Investment Company Act, the
Securities Act Rules and the Investment Company Act Rules and such as may
be required under state securities or blue sky laws in connection with the
purchase and distribution of the Shares by the Underwriters.
13. The Shares are duly authorized for listing, subject to official
notice of issuance, on the New York Stock Exchange.
14. The Company is duly registered with the Commission under the
Investment Company Act as a closed-end diversified management investment
company, and all required action has been taken by the Company under the
Securities Act and the Investment Company Act to make the public offering
and consummated the sale of the Shares as provided in the Agreement.
15. We confirm the accuracy of the statements set forth under the
heading "Taxes" in the Prospectus.
In rendering the foregoing opinions, Gordon Hurwitz Butowsky Weitzen
Shalov & Wein may rely (i) as to matters involving the application of laws
of any jurisdiction other than the State of New York or the United States,
to the extent they deem proper and specify in such opinion, upon the
opinion of other counsel of good standing whom they believe to be reliable
and who are satisfactory to counsel for the Underwriters and (ii) as to
matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
<PAGE>
ANNEX B
ACCOUNTANT'S LETTER
We have examined the statement of assets and liabilities of
Oppenheimer Multi-Sector Income Trust (the "Company"), as of March 15,
1988. Such statement, and our report with respect thereto, are included
in Amendment No. 2 filed with the Securities And Exchange COmmission (the
"Commission") on March 24, 1988, to the Registration Statement on Form N-2
(Registration No. 33-20191) filed with the Commissionon February 22, 1988
and amended on February 26, 1988. The Registration Statement, as ameded
on March 24, 1988, is herein referred to as teh Registration Statement.
In connection with the Registration Statement:
1. We are independent certified public accountants with respect to
the Company within the meaning of the Securities Act of 1933 (the
"Securities Act") and the rules and regulations thereunder.
2. In our opinion, the statement of assets and liabilities examined
by us and included in the Registration Statement complies as to form in
all material respects with the applicable accounting requirements or the
Securities Act and the Investment Company Act of 1940 and the respective
rules and regulations thereunder.
3. For purposes of this letter we have read the 1987 adn 1988
minutes of meetings of the shareholders, the Board of Directors and all
Committees of the Board of Trustees of the Company as set forth in the
minute books at March 15, 1988, officials of the Company having advised
us that the minutes of all such meetings through March 15, 1988, were set
forth therein, and have made inquiries of certain officials of the Company
who have responsibility for financial and accounting matters regarding
whether there was any change at March 24, 1988, in the net assets, capital
stock or liabilities of the Company as compared with amounts shown on the
statement of assets and liabilities included in the Registration
Statement. On the basis of these inquiries and our reading of the
minutes, nothing came to our attention that caused us to believe that
there were any such changes.
<PAGE>
ANNEX C
OPINION OF COUNSEL
1. The Investment Adviser has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Colorado, is duly qualified as a foreign corporation and in good standing
in each other jurisdiction in which its ownership of property or its
conduct of business requires such qualification and in which the failure
to qualify would have a material adverse effect on the business or
operations of the Investment Adviser and has full power and authority to
conduct its business as described in the Registration Statement.
2. The Investment Adviser is duly registered with the Commission
under the Advisers Act as an investment adviser and is not prohibited
under the Advisers Act, the Investment Company Act, the Advisers Act Rules
or the Investment Company Act Rules from acting as investment adviser or
otherwise under the Advisory Agreement for the Company as contemplated by
the Prospectus.
3. The Agreement has been duly and validly authorized, executed and
delivered by the Investment Adviser and complies with all applicable
provisions of the Investment Company Act and the Investment Company Act
Rules.
4. The Advisory Agreement has been duly and validly authorized,
executed and delivered by the Investment Adviser, complies with all
applicable provisions of the Investment Company Act and the Investment
Company Act Rules and constitutes a legal, valid and binding obligation
of the Investment Adviser enforceable in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, reorganization,
insolvency or other similar laws relating to or affecting creditors'
rights generally and to termination under the Investment Company Act.
5. No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association is
required for the consummation of the transactions contemplated in the
Agreement or the Advisory Agreement.
6. Neither the execution and delivery of the Agreement or the
Advisory Agreement nor the consummation by the Investment Advisor of the
transactions contemplated by the Agreement or the Advisory Agreement
conflicts with, or results in a breach of, the charter or By-laws of the
Investment Adviser or any agreement or instrument known to us to which the
Investment Adviser is a party or by which the Investment Adviser is bound,
andy law, rule, regulation or, so far as is known to us, order of any
court, government instrumentality, securities exchange or association or
arbitrator.
7. The description of the Investment Advisor in the Prospectus does
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated in it or necessary in order to make
the statements in it not misleading.
In rendering the foregoing opinion, the Counsel who is also general
counsel of Oppenheimer Management Corporation may rely (i) as to matters
involving the application of laws of any jurisdiction other than the State
of New York or the Untied States, to the extent he deems proper and
specifies in such opinion, upon the opinion of other counsel of good
standing whom he believes to be reliable and who are satisfactory to
counsel for the Underwriters and (ii) as to matters of fact, to the extent
he deems proper, on certificates of responsible officers of the Investment
Adviser and public officials.
OFMI\680
OPPENHEIMER MULTI-SECTOR INCOME TRUST
CO-CUSTODY AGREEMENT
Agreement made as of this 18th day of August, 1992, between
OPPENHEIMER MULTI-SECTOR INCOME TRUST, a business trust organized and
existing under the laws of the Commonwealth of Massachusetts, having its
principal office and place of business at 2 World Trade Center, New York,
New York 10048 (hereinafter called the "Fund"), and THE BANK OF NEW YORK,
a New York corporation authorized to do a banking business, having its
principal office and place of business at 48 Wall Street, New York, New
York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H
that for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
shall have the following meanings:
1. "Agreement" shall mean this Custody Agreement and all Appendices
and Certifications described in the Exhibits delivered in connection
herewith.
2. "Authorized Person" shall mean any person, whether or not such
person is an Officer or employee of the Fund, duly authorized by the Board
of Trustees of the Fund to give Oral Instructions and Written Instructions
on behalf of the Fund and listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the Custodian
from time to time, provided that each person who is designated in any such
Certificate as an "Officer of OSS" shall be an Authorized Person only for
purposes of Articles XII and XIII hereof.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its
successor or successors and its nominee or nominees.
4. "Call Option" shall mean an exchange traded Option with respect
to Securities other than Index, Futures Contracts, and Futures Contract
Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof
the specified underlying instruments, currency, or Securities.
5. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian which is actually received (irrespective of
constructive receipt) by the Custodian and signed on behalf of the Fund
by any two Officers. The term Certificate shall also include instructions
by the Fund to the Custodian communicated by a Terminal Link.
6. "Clearing Member" shall mean a registered broker-dealer which
is a clearing member under the rules of O.C.C. and a member of a national
securities exchange qualified to act as a custodian for an investment
company, or any broker-dealer reasonably believed by the Custodian to be
such a clearing member.
7. "Collateral Account" shall mean a segregated account so de-
nominated which is specifically allocated to a Series and pledged to the
Custodian as security for, and in consideration of, the Custodian's
issuance of any Put Option guarantee letter or similar document described
in paragraph 8 of Article V herein.
8. "Covered Call Option" shall mean an exchange traded Option
entitling the holder, upon timely exercise and payment of the exercise
price, as specified therein, to purchase from the writer thereof the
specified underlying instruments, currency, or Securities (excluding
Futures Contracts) which are owned by the writer thereof.
9. "Depository" shall mean The Depository Trust Company ("DTC"),
a clearing agency registered with the Securities and Exchange Commission,
its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized
to act as a depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees, specifically
identified in a certified copy of a resolution of the Fund's Board of
Trustees specifically approving deposits therein by the Custodian,
including, without limitation, a Foreign Depository.
10. "Financial Futures Contract" shall mean the firm commitment to
buy or sell financial instruments on a U.S. commodities exchange or board
of trade at a specified future time at an agreed upon price.
11. "Foreign Subcustodian" shall mean an "Eligible Foreign
Custodian" as defined in Rule 17-5 which is appointed by the Custodian to
perform or coordinate the receipt, custody and delivery of Foreign
Property of the Fund outside the United States in a manner consistent with
the provisions of this Agreement and whose written contract is approved
by the Board of Trustees of the Fund in accordance with Rule 17f-5.
References to the Custodian herein shall, when appropriate, include
reference to its Foreign Subcustodians.
12. "Foreign Depository" shall mean an entity organized under the
laws of a foreign country which operates a system outside the United
States in general use by foreign banks and securities brokers for the
central or transnational handling of securities or equivalent book-entries
which is regulated by a foreign government or agency thereof and which is
an "Eligible Foreign Custodian" as defined in Rule 17f-5.
13. "Foreign Securities" shall mean securities and/or short term
paper as defined in Rule 17f-5 under the Act, whether issued in registered
or bearer form.
14. "Foreign Property" shall mean Foreign Securities and money of
any currency which is held outside of the United States.
15. "Futures Contract" shall mean a Financial Futures Contract
and/or Index Futures Contracts.
16. "Futures Contract Option" shall mean an Option with respect to
a Futures Contract.
17. "Investment Company Act of 1940" shall mean the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder.
18. "Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount
of cash equal to a specified dollar amount times the difference between
the value of a particular index at the close of the last business day of
the contract and the price at which the futures contract is originally
struck.
19. "Index Option" shall mean an exchange traded Option entitling
the holder, upon timely exercise, to receive an amount of cash determined
by reference to the difference between the exercise price and the value
of the index on the date of exercise.
20. "Margin Account" shall mean a segregated account in the name of
a broker, dealer, futures commission merchant, or a Clearing Member, or
in the name of the Fund for the benefit of a broker, dealer, futures
commission merchant, or Clearing Member, or otherwise, in accordance with
an agreement between the Fund, the Custodian and a broker, dealer, futures
commission merchant or a Clearing Member (a "Margin Account Agreement"),
separate and distinct from the custody account, in which certain
Securities and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund may from
time to time determine. Securities held in the Book-Entry System or a
Depository shall be deemed to have been deposited in, or withdrawn from,
a Margin Account upon the Custodian's effecting an appropriate entry in
its books and records.
21. "Money Market Security" shall mean all instruments and ob-
ligations commonly known as a money market instruments, where the purchase
and sale of such securities normally requires settlement in federal funds
on the same day as such purchase or sale, including, without limitation,
certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and/or principal by the government of the United
States or agencies or instrumentalities thereof, any tax, bond or revenue
anticipation note issued by any state or municipal government or public
authority, commercial paper, certificates of deposit and bankers'
acceptances, repurchase agreements with respect to Securities and bank
time deposits.
22. "Nominee" shall mean, in addition to the name of the registered
nominee of the Custodian, (i) a partnership or other entity of a Foreign
Subcustodian which is used solely for the assets of its customers other
than the Custodian and the Foreign Subcustodian, if any, by which it was
appointed; or (ii) the nominee of a Foreign Depository which is used for
the securities and other assets of its customers, members or participants.
23. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of
1934, its successor or successors, and its nominee or nominees.
24. "Officers" shall mean the President, any Vice President, the
Secretary, the Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer, and any other person or persons, whether or not any
such other person is an officer or employee of the Fund, but in each case
only if duly authorized by the Board of Trustees of the Fund to execute
any Certificate, instruction, notice or other instrument on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix B or such
other Certificate as may be received by the Custodian from time to time;
provided that each person who is designated in any such Certificate as
holding the position of "Officer of OSS" shall be an Officer only for
purposes of Articles XII and XIII hereof.
25. "Option" shall mean a Call Option, Covered Call Option, Index
Option and/or a Put Option.
26. "Oral Instructions" shall mean verbal instructions actually
received (irrespective of constructive receipt) by the Custodian from an
Authorized Person or from a person reasonably believed by the Custodian
to be an Authorized Person.
27. "Put Option" shall mean an exchange traded Option with respect
to instruments, currency, or Securities other than Index Options, Futures
Contracts, and Futures Contract Options entitling the holder, upon timely
exercise and tender of the specified underlying instruments, currency, or
Securities, to sell such instruments, currency, or Securities to the
writer thereof for the exercise price.
28. "Repurchase Agreement" shall mean an agreement pursuant to which
the Fund buys Securities and agrees to resell such Securities at a
described or specified date and price.
29. "Reverse Repurchase Agreement" shall mean an agreement pursuant
to which the Fund sells Securities and agrees to repurchase such
Securities at a described or specified date and price.
30. "Rule 17f-5" shall mean Rule 17f-5 (Reg. 270.17f-5) promulgated
by the Securities and Exchange Commission under the Investment Company Act
of 1940, as amended.
31. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Index Options, Index Futures
Contracts, Index Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agreements, over
the counter Options on Securities, common stocks and other securities
having characteristics similar to common stocks, preferred stocks, debt
obligations issued by state or municipal governments and by public
authorities, (including, without limitation, general obligation bonds,
revenue bonds, industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or rights to any property or assets.
32. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as
a segregated account, by recordation or otherwise, within the custody
account in which certain Securities and/or other assets of the Fund
specifically allocated to such Series shall be deposited and withdrawn
from time to time in accordance with Certificates received by the
Custodian in connection with such transactions as the Fund may from time
to time determine.
33. "Series" shall mean the various portfolios, if any, of the Fund
as described from time to time in the current and effective prospectus for
the Fund, except that if the Fund does not have more than one portfolio,
"Series" shall mean the Fund or be ignored where a requirement would be
imposed on the Fund or the Custodian which is unnecessary if there is only
one portfolio.
34. "Shares" shall mean the shares of beneficial interest of the
Fund and its Series.
35. "Terminal Link" shall mean an electronic data transmission link
between the Fund and the Custodian requiring in connection with each use
of the Terminal Link the use of an authorization code provided by the
Custodian and at least two access codes established by the Fund, provided,
that the Fund shall have delivered to the Custodian a Certificate
substantially in the form of Appendix C.
36. "Transfer Agent" shall mean Oppenheimer Shareholder Services,
a division of Oppenheimer Management Corporation, its successors and as-
signs.
37. "Transfer Agent Account" shall mean any account in the name of
the Fund, or the Transfer Agent, as agent for the Fund, maintained with
United Missouri Bank or such other Bank designated by the Fund in a
Certificate.
38. "Written Instructions" shall mean written communications
actually received (irrespective of constructive receipt) by the Custodian
from an Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such system
whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the identity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned or held by the
Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except for monies received and maintained in the Transfer Agent
Account, or as otherwise provided in paragraph 7 of this Article or in
Article VIII or XV, the Fund will deliver or cause to be delivered to the
Custodian all Securities and all moneys owned by it, at any time during
the period of this Agreement, and shall specify with respect to such
Securities and money the Series to which the same are specifically
allocated, and the Custodian shall not be responsible for any Securities
or money not so delivered. Except for assets held at DTC, the Custodian
shall physically segregate, keep and maintain the Securities of the Series
separate and apart from each other Series and from other assets held by
the Custodian. Except as otherwise expressly provided in this Agreement,
the Custodian will not be responsible for any Securities and moneys not
actually received by it, unless the Custodian has been negligent or has
engaged in willful misconduct with respect thereto. The Custodian will
be entitled to reverse any credit of money made on the Fund's behalf where
such credits have been previously made and moneys are not finally col-
lected, unless the Custodian has been negligent or has engaged in willful
misconduct with respect thereto; provided that if such reversal is thirty
(30) days or more after the credit was issued, the Custodian will give
five (5) days' prior notice of such reversal. The Fund shall deliver to
the Custodian a certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit A hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis to deposit
in the Book-Entry System all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically allocated and
to utilize the Book-Entry System to the extent possible in connection with
its performance hereunder, including, without limitation, in connection
with settlements of purchases and sales of Securities, loans of Securities
and deliveries and returns of Securities collateral. Prior to a deposit
of Securities specifically allocated to a Series in any Depository, the
Fund shall deliver to the Custodian a certified resolution of the Board
of Trustees of the Fund, substantially in the form of Exhibit B hereto,
approving, authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate to deposit
in such Depository all Securities specifically allocated to such Series
eligible for deposit therein, and to utilize such Depository to the extent
possible with respect to such Securities in connection with its per-
formance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys
deposited in either the Book-Entry System or a Depository will be
represented in accounts which include only assets held by the Custodian
for customers, including, but not limited to, accounts in which the Custo-
dian acts in a fiduciary or representative capacity and will be
specifically allocated on the Custodian's books to the separate account
for the applicable Series. Prior to the Custodian's accepting, utilizing
and acting with respect to Clearing Member confirmations for Options and
transactions in Options for a Series as provided in this Agreement, the
Custodian shall have received a certified resolution of the Fund's Board
of Trustees, substantially in the form of Exhibit C hereto, approving,
authorizing and instructing the Custodian on a continuous and on-going
basis, until instructed to the contrary by a Certificate to accept,
utilize and act in accordance with such confirmations as provided in this
Agreement with respect to such Series. All Securities are to be held or
disposed of by the Custodian for, and subject at all times to the
instructions of, the Fund pursuant to the terms of this Agreement. The
Custodian shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any Securities except as provided by the terms of
this Agreement, and shall have the sole power to release and deliver
Securities held pursuant to this Agreement.
2. The Custodian shall establish and maintain separate accounts,
in the name of each Series, and shall credit to the separate account for
each Series all moneys received by it for the account of the Fund with
respect to such Series. Money credited to a separate account for a Series
shall be subject only to drafts, orders, or charges of the Custodian
pursuant to this Agreement and shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates or Resolutions of the Fund's
Board of Trustees certified by an Officer and by the Secretary or
Assistant Secretary of the Fund setting forth the name and address of the
person to whom the payment is to be made, the Series account from which
payment is to be made, the purpose for which payment is to be made, and
declaring such purpose to be a proper corporate purpose; provided,
however, that amounts representing dividends, distributions, or
redemptions proceeds with respect to Shares shall be paid only to the
Transfer Agent Account;
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series and
authorized by this Agreement; or
(d) Pursuant to Certificates to pay interest, taxes,
management fees or operating expenses (including, without limitation
thereto, Board of Trustees' fees and expenses, and fees for legal
accounting and auditing services), which Certificates set forth the name
and address of the person to whom payment is to be made, state the purpose
of such payment and designate the Series for whose account the payment is
to be made.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series
basis, of all transfers to or from the account of the Fund for a Series,
either hereunder or with any co-custodian or subcustodian appointed in
accordance with this Agreement during said day. Where Securities are
transferred to the account of the Fund for a Series but held in a
Depository, the Custodian shall upon such transfer also by book-entry or
otherwise identify such Securities as belonging to such Series in a
fungible bulk of Securities registered in the name of the Custodian (or
its nominee) or shown on the Custodian's account on the books of the Book-
Entry System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Fund with a detailed statement, on a per
Series basis, of the Securities and moneys held under this Agreement for
the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, all Securities held by the Custodian hereunder, which are
issued or issuable only in bearer form, except such Securities as are held
in the Book-Entry System, shall be held by the Custodian in that form; all
other Securities held hereunder may be registered in the name of the Fund,
in the name of any duly appointed registered nominee of the Custodian as
the Custodian may from time to time determine, or in the name of the Book-
Entry System or a Depository or their successor or successors, or their
nominee or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or a Depository any
Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the
Book-Entry System or in a Depository in a separate account in the name of
such Series physically segregated at all times from those of any other
person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of the Book-Entry System or a Depository with
respect to Securities held hereunder and therein deposited, shall with
respect to all Securities held for the Fund hereunder in accordance with
preceding paragraph 4:
(a) Promptly collect all income, dividends and dis-
tributions due or payable;
(b) Promptly give notice to the Fund and promptly present
for payment and collect the amount of money or other consideration payable
upon such Securities which are called, but only if either (i) the
Custodian receives a written notice of such call, or (ii) notice of such
call appears in one or more of the publications listed in Appendix D
annexed hereto, which may be amended at any time by the Custodian without
the prior consent of the Fund, provided the Custodian gives prior notice
of such amendment to the Fund;
(c) Promptly present for payment and collect for the
Fund's account the amount payable upon all Securities which mature;
(d) Promptly surrender Securities in temporary form in
exchange for definitive Securities;
(e) Promptly execute, as custodian, any necessary de-
clarations or certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now or hereafter
in effect;
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account
of a Series, all rights and similar securities issued with respect to any
Securities held by the Custodian for such Series hereunder; and
(g) Promptly deliver to the Fund all notices, proxies,
proxy soliciting materials, consents and other written information
(including, without limitation, notices of tender offers and exchange
offers, pendency of calls, maturities of Securities and expiration of
rights) relating to Securities held pursuant to this Agreement which are
actually received by the Custodian, such proxies and other similar
materials to be executed by the registered holder (if Securities are
registered otherwise than in the name of the Fund), but without indicating
the manner in which proxies or consents are to be voted.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository,
shall:
(a) Promptly execute and deliver to such persons as may
be designated in such Certificate proxies, consents, authorizations, and
any other instruments whereby the authority of the Fund as owner of any
Securities held hereunder for the Series specified in such Certificate may
be exercised;
(b) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation,
or the exercise of any right, warrant or conversion privilege and receive
and hold hereunder specifically allocated to such Series any cash or other
Securities received in exchange;
(c) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold hereunder
specifically allocated to such Series in exchange therefor such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery or such
Securities as may be issued upon such delivery; and
(d) Promptly present for payment and collect the amount
payable upon Securities which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have
received a Certificate from the Fund stating, that any such instruments
or certificates are available. The Fund shall deliver to the Custodian
such a Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to such
availability, the Custodian shall comply with Section 17(f) of the
Investment Company Act of 1940 in connection with the purchase, sale,
settlement, closing out or writing of Futures Contracts, Options, or
Futures Contract Options by making payments or deliveries specified in
Certificates in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer, or
futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Futures
Contracts, Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise in the name the
Custodian (or any nominee of the Custodian) as custodian for the Fund;
provided, however, that notwithstanding the foregoing, payments to or
deliveries from the Margin Account and payments with respect to Securities
to which a Margin Account relates, shall be made in accordance with the
terms and conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall,
notwithstanding any provision in this Agreement to the contrary, make
payment for any Futures Contract, Option, or Futures Contract Option for
which such instruments or such certificates are available only against the
delivery to the Custodian of such instrument or such certificate, and
deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt
by the Custodian of payment therefor. Any such instrument or certificate
delivered to the Custodian shall be held by the Custodian hereunder in
accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS,
FUTURES CONTRACT OPTIONS, REPURCHASE AGREEMENTS,
REVERSE REPURCHASE AGREEMENTS AND SHORT SALES
1. Promptly after each execution of a purchase of Securities by the
Fund, other than a purchase of an Option, a Futures Contract, a Futures
Contract Option, a Repurchase Agreement, a Reverse Repurchase Agreement
or a Short Sale, the Fund shall deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money Market
Securities, a Certificate, oral Instructions or Written Instructions,
specifying with respect to each such purchase: (a) the Series to which
such Securities are to be specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person from whom
or the broker through whom the purchase was made, and the name of the
clearing broker, if any; and (h) the name of the broker or other party to
whom payment is to be made. Custodian shall, upon receipt of such
Securities purchased by or for the Fund, pay to the broker specified in
the Certificate out of the moneys held for the account of such Series the
total amount payable upon such purchase, provided that the same conforms
to the total amount payable as set forth in such Certificate, oral
Instructions or Written Instructions.
2. Promptly after each execution of a sale of Securities by the
Fund, other than a sale of any Option, Futures Contract, Futures Contract
Option, Repurchase Agreement, Reverse Repurchase Agreement or Short Sale,
the Fund shall deliver such to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, a Certificate, and
(ii) with respect to each sale of Money Market Securities, a Certificate,
Oral Instructions or Written Instructions, specifying with respect to each
such sale: (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Security; (c)
the number of shares or principal amount sold, and accrued interest, if
any; (d) the date of sale and settlement; (e) the sale price per unit; (f)
the total amount payable to the Fund upon such sale; (g) the name of the
broker through whom or the person to whom the sale was made, and the name
of the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. On the settlement date, the Custodian
shall deliver the Securities specifically allocated to such Series to the
broker in accordance with generally accepted street practices and as
specified in the Certificate upon receipt of the total amount payable to
the Fund upon such sale, provided that the same conforms to the total
amount payable as set forth in such Certificate, oral Instructions or
Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after each execution of a purchase of any Option by the
Fund other than a closing purchase transaction, the Fund shall deliver to
the Custodian a Certificate specifying with respect to each Option
purchased: (a) the Series to which such Option is specifically allocated;
(b) the type of Option (put or call); (c) the instrument, currency, or
Security underlying such Option and the number of Options, or the name of
the in the case of an Index Option, the index to which such Option relates
and the number of Index Options purchased; (d) the expiration date; (e)
the exercise price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such purchase; and (h)
the name of the Clearing Member through whom such Option was purchased.
The Custodian shall pay, upon receipt of a Clearing Member's written
statement confirming the purchase of such Option held by such Clearing
Member for the account of the Custodian (or any duly appointed and
registered nominee of the Custodian) as Custodian for the Fund, out of
moneys held for the account of the Series to which such Option is to be
specifically allocated, the total amount payable upon such purchase to the
Clearing Member through whom the purchase was made, provided that the same
conforms to the amount payable as set forth in such Certificate.
2. Promptly after the execution of a sale of any Option purchased
by the Fund, other than a closing sale transaction, pursuant to paragraph
1 hereof, the Fund shall deliver to the Custodian a Certificate specifying
with respect to each such sale: (a) the Series to which such Option was
specifically allocated; (b) the type of Option (put or call); (c) the
instrument, currency, or Security underlying such Option and the number
of Options, or the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Index Option, the index to
which such Option relates and the number of Index Options sold; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g) the
total amount payable to the Fund upon such sale; and (h) the name of the
Clearing Member through whom the sale was made. The Custodian shall
consent to the delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding paragraph of
this Article with respect to such Option upon receipt by the Custodian of
the total amount payable to the Fund, provided that the same conforms to
the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Call Option: (a) the Series to which such Call Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Call Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid by the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Call Option was exercised. The Custo-
dian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the account of the
Series to which such Call Option was specifically allocated the total
amount payable to the Clearing Member through whom the Call Option was ex-
ercised, provided that the same conforms to the total amount payable as
set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series to which such Put Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Put Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Put Option was exercised. The Custodian
shall, upon receipt of the amount payable upon the exercise of the Put
Option, deliver or direct a Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms to the
amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Index Option: (a) the Series to which such Index Option was specifically
allocated; (b) the type of Index Option (put or call) (c) the number of
Options being exercised; (d) the index to which such Option relates; (e)
the expiration date; (f) the exercise price; (g) the total amount to be
received by the Fund in connection with such exercise; and (h) the
Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Covered Call Option: (a) the Series for which such Covered Call
Option was written; (b) the name of the issuer and the title and number
of shares for which the Covered Call Option was written and which underlie
the same; (c) the expiration date; (d) the exercise price; (e) the premium
to be received by the Fund; (f) the date such Covered Call Option was
written; and (g) the name of the Clearing Member through whom the premium
is to be received. The Custodian shall deliver or cause to be delivered,
upon receipt of the premium specified in the Certificate with respect to
such Covered Call Option, such receipts as are required in accordance with
the customs prevailing among Clearing Members dealing in Covered Call
Options and shall impose, or direct a Depository to impose, upon the
underlying Securities specified in the Certificate specifically allocated
to such Series such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the right, upon prior
written notification to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian and not
deposited with a Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate instructing the Custodian
to deliver, or to direct the Depository to deliver, the Securities subject
to such Covered Call Option and specifying: (a) the Series for which such
Covered Call Option was written; (b) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (c) the Clearing
Member to whom the underlying Securities are to be delivered; and (d) the
total amount payable to the Fund upon such delivery. Upon the return
and/or cancellation of any receipts delivered pursuant to paragraph 6 of
this Article, the Custodian shall deliver, or direct a Depository to
deliver, the underlying Securities as specified in the Certificate upon
payment of the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written; (b) the
name of the issuer and the title and number of shares for which the Put
Option is written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f)
the date such Put Option is written; (g) the name of the Clearing Member
through whom the premium is to be received and to whom a Put Option
guarantee letter is to be delivered; (h) the amount of cash, and/or the
amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in the Senior Security Account for such Series; and
(i) the amount of cash and/or the amount and kind of Securities
specifically allocated to such Series to be deposited into the Collateral
Account for such Series. The Custodian shall, after making the deposits
into the Collateral Account specified in the Certificate, issue a Put
Option guarantee letter substantially in the form utilized by the
Custodian on the date hereof, and deliver the same to the Clearing Member
specified in the Certificate upon receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall be under
no obligation to issue any Put Option guarantee letter or similar document
if it is unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put
Option was written; (b) the name of the issuer and title and number of
shares subject to the Put Option; (c) the Clearing Member from whom the
underlying Securities are to be received; (d) the total amount payable by
the Fund upon such delivery; (e) the amount of cash and/or the amount and
kind of Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of cash
and/or the amount and kind of Securities, specifically allocated to such
series, if any, to be withdrawn from the Senior Security Account. Upon
the return and/or cancellation of any Put Option guarantee letter or
similar document issued by the Custodian in connection with such Put
Option, the Custodian shall pay out of the moneys held for the account of
the series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set
forth in such Certificate, upon delivery of such Securities, and shall
make the withdrawals specified in such Certificate.
10. Whenever the Fund writes an Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) whether such Index Option is a put or a call; (c) the number
of Options written; (d) the index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through
whom such Option was written; (h) the premium to be received by the Fund;
(i) the amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; (j) the amount of cash and/or the amount
and kind of Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and (k) the amount
of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account, and the name
in which such account is to be or has been established. The Custodian
shall, upon receipt of the premium specified in the Certificate, make the
deposits, if any, into the Senior Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which the
Custodian has specifically agreed to issue, which are in accordance with
the customs prevailing among Clearing Members in Index Options and make
the deposits into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the Certi-
ficate.
11. Whenever an Index Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) such information as may be necessary to identify the Index
Option being exercised; (c) the Clearing Member through whom such Index
Option is being exercised; (d) the total amount payable upon such
exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be with-
drawn from the Margin Account; and (f) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Senior Security
Account for such Series; and the amount of cash and/or the amount and kind
of Securities, if any, to be withdrawn from the Collateral Account for
such Series. Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the moneys held for the account of the Series
to which such Stock Index Option was specifically allocated to the Clear-
ing Member specified in the Certificate the total amount payable, if any,
as specified therein.
12. Promptly after the execution of a purchase or sale by the Fund
of any Option identical to a previously written Option described in
paragraphs, 6, 8 or 10 of this Article in a transaction expressly
designated as a "Closing Purchase Transaction" or a "Closing Sale
Transaction", the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to the Option being purchased: (a)
that the transaction is a Closing Purchase Transaction or a Closing Sale
Transaction; (b) the Series for which the Option was written; (c) the
instrument, currency, or Security subject to the Option, or, in the case
of an Index Option, the index to which such Option relates and the number
of Options held; (d) the exercise price; (e) the premium to be paid by or
the amount to be paid to the Fund; (f) the expiration date; (g) the type
of Option (put or call); (h) the date of such purchase or sale; (i) the
name of the Clearing Member to whom the premium is to be paid or from whom
the amount is to be received; and (j) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Collateral
Account, a specified Margin Account, or the Senior Security Account for
such Series. Upon the Custodian's payment of the premium or receipt of
the amount, as the case may be, specified in the Certificate and the
return and/or cancellation of any receipt issued pursuant to paragraphs
6, 8 or 10 of this Article with respect to the Option being liquidated
through the Closing Purchase Transaction or the Closing Sale Transaction,
the Custodian shall remove, or direct a Depository to remove, the pre-
viously imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing
Purchase Transaction with respect to any Option purchased or written by
the Fund and described in this Article, the Custodian shall delete such
Option from the statements delivered to the Fund pursuant to paragraph 3
Article III herein, and upon the return and/or cancellation of any
receipts issued by the Custodian, shall make such withdrawals from the
Collateral Account, and the Margin Account and/or the Senior Security
Account as may be specified in a Certificate received in connection with
such expiration, exercise, or consummation.
14. Securities acquired by the Fund through the exercise of an
Option described in this Article shall be subject to Article IV hereof.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
such Futures Contract, (or with respect to any number of identical Futures
Contract (s)): (a) the Series for which the Futures Contract is being
entered; (b) the category of Futures Contract (the name of the underlying
index or financial instrument); (c) the number of identical Futures
Contracts entered into; (d) the delivery or settlement date of the Futures
Contract(s); (e) the date the Futures Contract(s) was (were) entered into
and the maturity date; (f) whether the Fund is buying (going long) or
selling (going short) such Futures Contract(s); (g) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series; (h) the name of the broker,
dealer, or futures commission merchant through whom the Futures Contract
was entered into; and (i) the amount of fee or commission, if any, to be
paid and the name of the broker, dealer, or futures commission merchant
to whom such amount is to be paid. The Custodian shall make the deposits,
if any, to the Margin Account in accordance with the terms and conditions
of the Margin Account Agreement. The Custodian shall make payment out of
the moneys specifically allocated to such Series of the fee or commission,
if any, specified in the Certificate and deposit in the Senior Security
Account for such Series the amount of cash and/or the amount and kind of
Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or futures commission
merchant with respect to an outstanding Futures Contract shall be made by
the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
(b) Any variation margin payment or similar payment from
a broker, dealer, or futures commission merchant to the Fund with respect
to an outstanding Futures Contract shall be received and dealt with by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian prior to the delivery
or settlement date a Certificate specifying: (a) the Futures Contract and
the Series to which the same relates; (b) with respect to an Index Futures
Contract, the total cash settlement amount to be paid or received, and
with respect to a Financial Futures Contract, the Securities and/or amount
of cash to be delivered or received; (c) the broker, dealer, or futures
commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn
from the Senior Security Account for such Series. The Custodian shall
make the payment or delivery specified in the Certificate, and delete such
Futures Contract from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset
a Futures Contract held by the Custodian hereunder, the Fund shall deliver
to the Custodian a Certificate specifying: (a) the items of information
required in a Certificate described in paragraph 1 of this Article, and
(b) the Futures Contract being offset. The Custodian shall make payment
out of the money specifically allocated to such Series of the fee or
commission, if any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the Fund pursuant
to paragraph 3 of Article III herein, and make such withdrawals from the
Senior Security Account for such Series as may be specified in the Cer-
tificate. The withdrawals, if any, to be made from the Margin Account
shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the execution of a purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract Option: (a)
the Series to which such Option is specifically allocated; (b) the type
of Futures Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the Futures
Contract underlying the Futures Contract Option purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the amount of premium to be paid by the Fund upon such
purchase; (h) the name of the broker or futures commission merchant
through whom such Option was purchased; and (i) the name of the broker,
or futures commission merchant, to whom payment is to be made. The Cus-
todian shall pay out of the moneys specifically allocated to such Series
the total amount to be paid upon such purchase to the broker or futures
commissions merchant through whom the purchase was made, provided that the
same conforms to the amount set forth in such Certificate.
2. Promptly after the execution of a sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
each such sale: (a) Series to which such Futures Contract Option was
specifically allocated; (b) the type of Future Contract Option (put or
call); (c) the type of Futures Contract and such other information as may
be necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the date of sale; (e) the sale price; (f) the date
of settlement; (g) the total amount payable to the Fund upon such sale;
and (h) the name of the broker of futures commission merchant through whom
the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of
the total amount payable to the Fund, provided the same conforms to the
total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to
which such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option (put or call) being exercised; (c) the
type of Futures Contract underlying the Futures Contract Option; (d) the
date of exercise; (e) the name of the broker or futures commission
merchant through whom the Futures Contract Option is exercised; (f) the
net total amount, if any, payable by the Fund; (g) the amount, if any, to
be received by the Fund; and (h) the amount of cash and/or the amount and
kind of Securities to be deposited in the Senior Security Account for such
Series. The Custodian shall make, out of the moneys and Securities
specifically allocated to such Series, the payments of money, if any, and
the deposits of Securities, if any, into the Senior Security Account as
specified in the Certificate. The deposits, if any, to be made to the
Margin Account shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with
respect to such Futures Contract Option: (a) the Series for which such
Futures Contract Option was written; (b) the type of Futures Contract
Option (put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium to be received by the Fund; (g) the name
of the broker or futures commission merchant through whom the premium is
to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon receipt of the premium specified
in the Certificate, make out of the moneys and Securities specifically
allocated to such Series the deposits into the Senior Security Account,
if any, as specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is
a call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract
Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying the Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
of cash and/or the amount and kind of Securities to be deposited in the
Senior Security Account for such Series. The Custodian shall, upon its
receipt of the net total amount payable to the Fund, if any, specified in
such Certificate make the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The de-
posits, if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund
and which is a put is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Option
was specifically allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying such Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
and kind of Securities and/or cash to be withdrawn from or deposited in,
the Senior Security Account for such Series, if any. The Custodian shall,
upon its receipt of the net total amount payable to the Fund, if any,
specified in the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits to and/or withdrawals from the Margin Account,
if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
7. Promptly after the execution by the Fund of a purchase of any
Futures Contract Option identical to a previously written Futures Contract
Option described in this Article in order to liquidate its position as a
writer of such Futures Contract Option, the Fund shall deliver to the
Custodian a Certificate specifying with respect to the Futures Contract
Option being purchased: (a) the Series to which such Option is
specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Future Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Option
Contract; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the name of the broker or futures commission
merchant to whom the premium is to be paid; and (h) the amount of cash
and/or the amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate.
The withdrawals, if any, to be made from the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or
purchased by the Fund and described in this Article, the Custodian shall
(a) delete such Futures Contract Option from the statements delivered to
the Fund pursuant to paragraph 3 of Article III herein and (b) make such
withdrawals from and/or in the case of an exercise such deposits into the
Senior Security Account as may be specified in a Certificate. The
deposits to and/or withdrawals from the Margin Account, if any, shall be
made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of
a Futures Contract Option described in this Article shall be subject to
Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after the execution of any short sales of Securities
by any Series of the Fund, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale was
made; (b) the name of the issuer-and the title of the Security; (c) the
number of shares or principal amount sold, and accrued interest or
dividends, if any; (d) the dates of the sale and settlement; (e) the sale
price per unit; (f) the total amount credited to the Fund upon such sale,
if any, (g) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in
which such Margin Account has been or is to be established; (h) the amount
of cash and/or the amount and kind of Securities, if any, to be deposited
in a Senior Security Account, and (i) the name of the broker through whom
such short sale was made. The Custodian shall upon its receipt of a
statement from such broker confirming such sale and that the total amount
credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or
any nominee of the Custodian) as custodian of the Fund, issue a receipt
or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
2. Promptly after the execution of a purchase to close-out any
short sale of Securities, the Fund shall promptly deliver to the Custodian
a Certificate specifying with respect to each such closing out: (a) the
Series for which such transaction is being made; (b) the name of the
issuer and the title of the Security; (c) the number of shares or the
principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of
closing-out and settlement; (e) the purchase price per unit; (f) the net
total amount payable to the Fund upon such closing-out; (g) the net total
amount payable to the broker upon such closing-out; (h) the amount of cash
and the amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Senior Security Account; and
(j) the name of the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount
payable to the Fund upon such closing-out, and the return and/or
cancellation of the receipts, if any, issued by the Custodian with respect
to the short sale being closed-out, pay out of the moneys held for the
account of the Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Senior
Security Account, as the same are specified in the Certificate.
ARTICLE IX
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Repurchase Agreement or a
Reverse Repurchase Agreement with respect to Securities and money held by
the Custodian hereunder, the Fund shall deliver to the Custodian a Certi-
ficate, or in the event such Repurchase Agreement or Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions,
or Written Instructions specifying: (a) the Series for which the
Repurchase Agreement or Reverse Repurchase Agreement is entered; (b) the
total amount payable to or by the Fund in connection with such Repurchase
Agreement or Reverse Repurchase Agreement and specifically allocated to
such Series; (c) the broker, dealer, or financial institution with whom
the Repurchase Agreement or Reverse Repurchase Agreement is entered; (d)
the amount and kind of Securities to be delivered or received by the Fund
to or from such broker, dealer, or financial institution; (e) the date of
such Repurchase Agreement or Reverse Repurchase Agreement; and (f) the
amount of cash and/or the amount and kind of Securities, if any, specifi-
cally allocated to such Series to be deposited in a Senior Security Ac-
count for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable
to or by the Fund specified in the Certificate, Oral Instructions, or
Written Instructions make or accept the delivery to or from the broker,
dealer, or financial institution and the deposits, if any, to the Senior
Security Account, specified in such Certificate, Oral Instructions, or
Written Instructions.
2. Upon the termination of a Repurchase Agreement or a Reverse
Repurchase Agreement described in preceding paragraph 1 of this Article,
the Fund shall promptly deliver a Certificate or, in the event such
Repurchase Agreement or Reverse Repurchase Agreement is a Money Market
Security, a Certificate, Oral Instructions, or Written Instructions to the
Custodian specifying: (a) the Repurchase Agreement or Reverse Repurchase
Agreement being terminated and the Series for which same was entered; (b)
the total amount payable to or by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received or
delivered by the Fund and specifically allocated to such Series in
connection with such termination; (d) the date of termination; (e) the
name of the broker, dealer, or financial institution with whom the Repur-
chase Agreement or Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Senior Securities Account for such Series. The
Custodian shall, upon receipt or delivery of the amount and kind of
Securities or cash to be received or delivered by the Fund specified in
the Certificate, Oral Instructions, or Written Instructions, make or
receive the payment to or from the broker, dealer, or financial
institution and make the withdrawals, if any, from the Senior Security
Account, specified in such Certificate, Oral Instructions, or Written
Instructions.
3. The Certificates, Oral Instructions, or Written Instructions
described in paragraphs 1 and 2 of this Article may with respect to any
particular Repurchase Agreement or Reverse Repurchase Agreement be
combined and delivered to the Custodian at the time of entering into such
Repurchase Agreement or Reverse Repurchase Agreement.
ARTICLE X
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall
deliver or cause to be delivered to the Custodian a Certificate specifying
with respect to each such loan: (a) the Series to which the loaned
Securities are specifically allocated; (b) the name of the issuer and the
title of the Securities, (c) the number of shares or the principal amount
loaned, (d) the date of loan and delivery, (e) the total amount to be
delivered to the Custodian against the loan of the Securities, including
the amount of cash collateral and the premium, if any, separately iden-
tified, and (f) the name of the broker, dealer, or financial institution
to which the loan was made. The Custodian shall deliver the Securities
thus designated to the broker, dealer or financial institution to which
the loan was made upon receipt of the total amount designated in the
Certificate as to be delivered against the loan of Securities. The
Custodian may accept payment in connection with a delivery otherwise than
through the Book-Entry System or a Depository only in the form of a
certified or bank cashier's check payable to the order of the Fund or the
Custodian drawn on New York Clearing House funds.
2. In connection with each termination of a loan of Securities by
the Fund, the Fund shall deliver or cause to be delivered to the Custodian
a Certificate specifying with respect to each such loan termination and
return of Securities: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title of the
Securities to be returned, (c) the number of shares or the principal
amount to be returned, (d) the date of termination, (e) the total amount
to be delivered by the Custodian (including the cash collateral for such
Securities minus any offsetting credits as described in said Certificate),
and (f) the name of the broker, dealer, or financial institution from
which the Securities will be returned. The Custodian shall receive all
Securities returned from the broker, dealer, or financial institution to
which such Securities were loaned and upon receipt thereof shall pay, out
of the moneys held for the account of the Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall establish a Senior Security Account and from
time to time make such deposits thereto, or withdrawals therefrom, as
specified in a Certificate. Such Certificate shall specify the Series for
which such deposit or withdrawal is to be made and the amount of cash
and/or the amount and kind of Securities specifically allocated to such
Series to be deposited in, or withdrawn from, such Senior Security Account
for such Series. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and the number
of shares or the principal amount of any particular Securities to be
deposited by the Custodian into, or withdrawn from, a Senior Securities
Account, the Custodian shall be under no obligation to make any such
deposit or withdrawal and shall promptly notify the Fund that no such
deposit has been made.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing
Member in whose name, or for whose benefit, the account was established
as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt
with in accordance with the terms and conditions of the Margin Account
Agreement.
4. The Custodian shall to the extent permitted by the Fund's
Declaration of Trust, investment restrictions and the Investment Company
Act of 1940 have a continuing lien and security interest in and to any
property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may
enforce its lien and realize on any such property whenever the Custodian
has made payment or delivery pursuant to any Put Option guarantee letter
or similar document or any receipt issued hereunder by the Custodian;
provided, however, that the Custodian shall not be required to issue any
Put Option guarantee letter unless it shall have received an opinion of
counsel to the Fund or its investment adviser that the issuance of such
letters is authorized by the Fund and that the Custodian's continuing lien
and security interest is valid, enforceable and not limited by the
Declaration of Trust, any investment restrictions or the Investment
Company Act of 1940. In the event the Custodian should realize on any
such property net proceeds which are less than the Custodian's obligations
under any Put Option guarantee letter or similar document or any receipt,
such deficiency shall be a debt owed the Custodian by the Fund within the
scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with
a statement with respect to each Margin Account in which money or
Securities are held specifying as of the close of business on the previous
business day: (a) the name of the Margin Account; (b) the amount and kind
of Securities held therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker, dealer, or
futures commission merchant specified in the name of a Margin Account a
copy of the statement furnished the Fund with respect to such Margin
Account.
6. The Custodian shall establish a Collateral Account and from time
to time shall make such deposits thereto as may be specified in a
Certificate. Promptly after the close of business on each business day
in which cash and/or Securities are maintained in a Collateral Account for
any Series, the Custodian shall furnish the Fund with a statement with
respect to such Collateral Account specifying the amount of cash and/or
the amount and kind of Securities held therein. No later than the close
of business next succeeding the delivery to the Fund of such statement,
the Fund shall furnish to the Custodian a Certificate or Written
Instructions specifying the then market value of the Securities described
in such statement. In the event such then market value is indicated to
be less than the Custodian's obligation with respect to any outstanding
Put Option guarantee letter or similar document, the Fund shall promptly
specify in a Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution
of the Board of Trustees of the Fund, certified by the Secretary or any
Assistant Secretary, either (i) setting forth with respect to the Series
specified therein the date of the declaration of a dividend or distribu-
tion, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and
the total amount payable to the Transfer Agent Account and any sub-
dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein and the
declaration of dividends and distributions thereon the Custodian to rely
on Oral Instructions, Written Instructions, or a Certificate setting forth
the date of the declaration of such dividend or distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per Share of such Series
to the shareholders of record as of that date and the total amount payable
to the Transfer Agent Account on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions, or Certificate, as the case may be,
the Custodian shall pay to the Transfer Agent Account out of the moneys
held for the account of the Series specified therein the total amount
payable to the Transfer Agent Account and with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver or
cause to be delivered, to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the Custodian
for the sale of such Shares and specifically allocated to the separate
account in the name of such Series.
2. Upon receipt of such money from the Fund's General Distributor,
the Custodian shall credit such money to the separate account in the name
of the Series for which such money was received.
3. Upon issuance of any Shares of any Series the Custodian shall
pay, out of the money held for the account of such Series, all original
issue or other taxes required to be paid by the Fund in connection with
such issuance upon the receipt of a Certificate specifying the amount to
be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder
in connection with a redemption of any Shares, it shall furnish, or cause
to be furnished, to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt of an advice from an Authorized Person setting
forth the Series and number of Shares received by the Transfer Agent for
redemption and that such Shares are in good form for redemption, the
Custodian shall make payment to the Transfer Agent Account out of the
moneys held in the separate account in the name of the Series the total
amount specified in the Certificate issued pursuant to the foregoing
paragraph 4 of this Article.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held
by the Custodian in the separate account for such Series shall be insuffi-
cient to pay the total amount payable upon a purchase of Securities
specifically allocated to such Series, as set forth in a Certificate, Oral
Instructions, or Written Instructions or which results in an overdraft in
the separate account of such Series for some other reason, or if the Fund
is for any other reason indebted to the Custodian with respect to a Ser-
ies, (except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate agreement
and subject to the provisions of paragraph 2 of this Article), such
overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund for such Series payable on demand and shall bear
interest from the date incurred at a rate per annum (based on a 360-day
year for the actual number of days involved) equal to the Federal Funds
Rate plus 1/2%, such rate to be adjusted on the effective date of any change
in such Federal Funds Rate but in no event to be less than 6% per annum.
In addition, unless the Fund has given a Certificate that the Custodian
shall not impose a lien and security interest to secure such overdrafts
(in which event it shall not do so), the Custodian shall have a continuing
lien and security interest in the aggregate amount of such overdrafts and
indebtedness as may from time to time exist in and to any property
specifically allocated to such Series at any time held by it for the
benefit of such Series or in which the Fund may have an interest which is
then in the Custodian's possession or control or in possession or control
of any third party acting in the Custodian's behalf. The Fund authorizes
the Custodian, in its sole discretion, at any time to charge any such
overdraft or indebtedness together with interest due thereon against any
money balance in an account standing in the name of such Series' credit
on the Custodian's books. In addition, the Fund hereby covenants that on
each Business Day on which either it intends to enter a Reverse Repurchase
Agreement and/or otherwise borrow from a third party, or which next
succeeds a Business Day on which at the close of business the Fund had
outstanding a Reverse Repurchase Agreement or such a borrowing, it shall
prior to 9 a.m., New York City time, advise the Custodian, in writing, of
each such borrowing, shall specify the Series to which the same relates,
and shall not incur any indebtedness, including pursuant to any Reverse
Repurchase Agreement, not so specified other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using Securities held by the Custodian hereunder as
collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the
Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the Fund, or
other loan agreement, (d) the time and date, if known, on which the loan
is to be entered into, (e) the date on which the loan becomes due and
payable, (f) the total amount payable to the Fund on the borrowing date,
(g) the market value of Securities to be delivered as collateral for such
loan, including the name of the issuer, the title and the number of shares
or the principal amount of any particular Securities, and (h) a statement
specifying whether such loan is for investment purposes or for temporary
or emergency purposes and that such loan is in conformance with the
Investment Company Act of 1940 and the Fund's prospectus and Statement of
Additional Information. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed
promissory note, if any, against delivery by the lending bank of the total
amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the Certificate. The Custodian may, at the
option of the lending bank, keep such collateral in its possession, but
such collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver such Securities as additional collateral as may be specified
in a Certificate to collateralize further any transaction described in
this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the
Custodian shall receive from time to time such return of collateral as may
be tendered to it. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and number of
shares or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, to any such bank, the Custodian
shall not be under any obligation to deliver any Securities.
ARTICLE XV
CUSTODY OF ASSETS OUTSIDE THE U.S.
1. The Custodian is authorized and instructed to employ, as its
agent, as subcustodians for the securities and other assets of the Fund
maintained outside of the United States the Foreign Subcustodians and For-
eign Depositories designated on Schedule A hereto. Except as provided in
Schedule A, the Custodian shall employ no other Foreign Custodian or
Foreign Depository. The Custodian and the Fund may amend Schedule A
hereto from time to time to agree to designate any additional Foreign
Subcustodian or Foreign Depository with which the Custodian has an
agreement for such entity to act as the Custodian's agent, as subcus-
todian, and which the Custodian in its absolute discretion proposes to
utilize to hold any of the Fund's Foreign Property. Upon receipt of a
Certificate or Written Instructions from the Fund, the Custodian shall
cease the employment of any one or more of such subcustodians for
maintaining custody of the Fund's assets and such custodian shall be
deemed deleted from Schedule A.
2. The Custodian shall limit the securities and other assets
maintained in the custody of the Foreign Subcustodians to: (a) "foreign
securities," as defined in paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash equivalents in such
amounts as the Fund may determine to be reasonably necessary to effect the
foreign securities transactions of the Fund.
3. The Custodian shall identify on its books as belonging to the
Fund, the Foreign Securities held by each Foreign Subcustodian.
4. Each agreement pursuant to which the Custodian employs a Foreign
Subcustodian shall be substantially in the form reviewed and approved by
the Fund and will not be amended in a way that materially affects the Fund
without the Fund's prior written consent and shall:
(a) require that such institution establish custody account(s)
for the Custodian on behalf of the Fund and physically segregate in each
such account securities and other assets of the fund, and, in the event
that such institution deposits the securities of the Fund in a Foreign
Depository, that it shall identify on its books as belonging to the Fund
or the Custodian, as agent for the Fund, the securities so deposited;
(b) provide that:
(1) the assets of the Fund will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of
the Foreign Subcustodian or its creditors, except a claim of payment for
their safe custody or administration;
(2) beneficial ownership for the assets of the Fund will
be freely transferable without the payment of money or value other than
for custody or administration;
(3) adequate records will be maintained identifying the
assets as belonging to the Fund;
(4) the independent public accountants for the Fund will
be given access to the books and records of the Foreign Subcustodian
relating to its actions under its agreement with the Custodian or
confirmation of the contents of those records;
(5) the Fund will receive periodic reports with respect
to the safekeeping of the Fund's assets, including, but not necessarily
limited to, notification of any transfer to or from the custody
account(s); and
(6) assets of the Fund held by the Foreign Subcustodian
will be subject only to the instructions of the Custodian or its agents.
(c) Require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian from and against any loss, damage, cost, expense, liability or
claim arising out of or in connection with the institution's performance
of such obligations, with the exception of any such losses, damages,
costs, expenses, liabilities or claims arising as a result of an act of
God. At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a
Foreign Subcustodian as a consequence of any such loss, damage, cost,
expense, liability or claim of or to the Fund, if and to the extent that
the Fund has not been made whole for any such loss, damage, cost, expense,
liability or claim.
5. Upon receipt of a Certificate or Written Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall on behalf of the Fund make or cause its Foreign
Subcustodian to transfer, exchange or deliver securities owned by the
Fund, except to the extent explicitly prohibited therein. Upon receipt
of a Certificate or Written Instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
on behalf of the fund pay out or cause its Foreign Subcustodians to pay
out monies of the Fund. The Custodian shall use all means reasonably
available to it, including, if specifically authorized by the Fund in a
Certificate, any necessary litigation at the cost and expense of the Fund
(except as to matters for which the Custodian is responsible hereunder)
to require or compel each Foreign Subcustodian or Foreign Depository to
perform the services required of it by the agreement between it and the
Custodian authorized pursuant to this Agreement.
6. The Custodian shall maintain all books and records as shall be
necessary to enable the Custodian readily to perform the services required
of it hereunder with respect to the Fund's Foreign Properties. The
Custodians shall supply to the Fund from time to time, as mutually agreed
upon, statements in respect of the Foreign Securities and other Foreign
Properties of the Fund held by Foreign Subcustodians, directly or through
Foreign Depositories, including but not limited to an identification of
entities having possession of the Fund's Foreign Securities and other
assets, an advice or other notification of any transfers of securities to
or from each custodial account maintained for the Fund or the Custodian
on behalf of the Fund indicating, as to securities acquired for the Fund,
the identity of the entity having physical possession of such securities.
The Custodian shall promptly and faithfully transmit all reports and
information received pertaining to the Foreign Property of the Fund,
including, without limitation, notices or reports of corporate action,
proxies and proxy soliciting materials.
7. Upon request of the Fund, the Custodian shall use reasonable
efforts to arrange for the independent accountants of the Fund to be
afforded access to the books and records of any Foreign Subcustodian, or
confirmation of the contents thereof, insofar as such books and records
relate to the Foreign Property of the Fund or the performance of such
Foreign Subcustodian under its agreement with the Custodian; provided that
any litigation to afford such access shall be at the sole cost and expense
of the Fund.
8. The Custodian recognizes that employment of a Foreign Sub-
custodian or Foreign Depository for the Fund's Foreign Securities and
Foreign Property is permitted by Section 17(f) of the Investment Company
Act of 1940 only upon compliance with Section (a) of Rule 17f-5
promulgated thereunder. With respect to the Foreign Subcustodians and
Foreign Depositories identified on Schedule A, the Custodian represents
that it has furnished the Fund with certain materials prepared by the
Custodian and with such other information in the possession of the Cus-
todian as the Fund advised the Custodian was reasonably necessary to
assist the Board of Trustees of the Fund in making the determinations
required of the Board of Trustees by Rule 17f-5, including, without
limitation, consideration of the matters set forth in the Notes to Rule
17f-5. If the Custodian recommends any additional Foreign Subcustodian
or Foreign Depository, the Custodian shall supply information similar in
kind and scope to that furnished pursuant to the preceding sentence. Fur-
ther, the Custodian shall furnish annually to the Fund, at such time as
the Fund and Custodian shall mutually agree, information concerning each
Foreign Subcustodian and Foreign Depository then identified on Schedule
A similar in kind and scope to that furnished pursuant to the preceding
two sentences.
9. The Custodian's employment of any Foreign Subcustodian or
Foreign Depository shall constitute a representation that the Custodian
believes in good faith that such Foreign Subcustodian or Foreign
Depository provides a level of safeguards for maintaining the Fund's
assets not materially different from that provided by the Custodian in
maintaining the Fund's securities in the United States. In addition, the
Custodian shall monitor the financial condition and general operational
performance of the Foreign Subcustodians and Foreign Depositories and
shall promptly inform the Fund in the event that the Custodian has actual
knowledge of a material adverse change in the financial condition thereof
or that there appears to be a substantial likelihood that the share-
holders' equity of any Foreign Subcustodian will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million , or that the Foreign Subcustodian
or Foreign Depository has breached the agreement between it and the
Custodian in a way that the Custodian believes adversely affects the Fund.
Further, the Custodian shall advise the Fund if it believes that there is
a material adverse change in the operating environment of any Foreign
Subcustodian or Foreign Depository.
ARTICLE XVI
CONCERNING THE CUSTODIAN
1. The Custodian shall use reasonable care in the performance of
its duties hereunder, and, except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account Agreement, except
for any such loss or damage arising out of its own negligence, bad faith,
or willful misconduct or that of the subcustodians or co-custodians
appointed by the Custodian or of the officers, employees, or agents of any
of them. The Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and obtain the
advice and opinion of counsel to the Fund, at the expense of the Fund, or
of its own counsel, at its own expense, and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the Fund for any
loss or damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, bad faith or willful mis-
conduct on the part of the Custodian or any of its employees or agents.
2. Notwithstanding the foregoing, the Custodian shall be under no
obligation to inquire into, and shall not be liable for:
(a) The validity (but not the authenticity) of the issue of any
Securities purchased, sold, or written by or for the Fund, the legality
of the purchase, sale or writing thereof, or the propriety of the amount
paid or received therefor, as specified in a Certificate, Oral
Instructions, or Written Instructions;
(b) The legality of the sale or redemption of any Shares, or
the propriety of the amount to be received or paid therefor, as specified
in a Certificate;
(c) The legality of the declaration or payment of any dividend
by the Fund, as specified in a resolution, Certificate, Oral Instructions,
or Written Instructions;
(d) The legality of any borrowing by the Fund using Securities
as collateral;
(e) The legality of any loan of portfolio Securities, nor shall
the Custodian be under any duty or obligation to see to it that the cash
collateral delivered to it by a broker, dealer, or financial institution
or held by it at any time as a result of such loan of portfolio Securities
of the Fund is adequate collateral for the Fund against any loss it might
sustain as a result of such loan, except that this subparagraph shall not
excuse any liability the Custodian may have for failing to act in accor-
dance with Article X hereof or any Certificate, Oral Instructions or
Written Instructions given in accordance with this Agreement. The Custo-
dian specifically, but not by way of limitation, shall not be under any
duty or obligation periodically to check or notify the Fund that the
amount of such cash collateral held by it for the Fund is sufficient
collateral for the Fund, but such duty or obligation shall be the sole
responsibility of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution
to which portfolio Securities of the Fund are lent pursuant to Article X
of this Agreement makes payment to it of any dividends or interest which
are payable to or for the account of the Fund during the period of such
loan or at the termination of such loan, provided, however, that the
Custodian shall promptly notify the Fund in the event that such dividends
or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or
Collateral Account in connection with transactions by the Fund, except
that this subparagraph shall not excuse any liability the Custodian may
have for failing to establish, maintain, make deposits to or withdrawals
from such accounts in accordance with this Agreement. In addition, the
Custodian shall be under no duty or obligation to see that any broker,
dealer, futures commission merchant or Clearing Member makes payment to
the Fund of any variation margin payment or similar payment which the Fund
may be entitled to receive from such broker, dealer, futures commission
merchant or Clearing Member, to see that any payment received by the
Custodian from any broker, dealer, futures commission merchant or Clearing
Member is the amount the Fund is entitled to receive, or to notify the
Fund of the Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft,
or other instrument for the payment of money, received by it on behalf of
the Fund until the Custodian actually receives such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. With respect to Securities held in a Depository, except as
otherwise provided in paragraph 5(b) of Article III hereof, the Custodian
shall have no responsibility and shall not be liable for ascertaining or
acting upon any calls, conversions, exchange offers, tenders, interest
rate changes or similar matters relating to such Securities, unless the
Custodian shall have actually received timely notice from the Depository
in which such Securities are held. In no event shall the Custodian have
any responsibility or liability for the failure of a Depository to
collect, or for the late collection or late crediting by a Depository of
any amount payable upon Securities deposited in a Depository which may
mature or be redeemed, retired, called or otherwise become payable. How-
ever, upon receipt of a Certificate from the Fund of an overdue amount on
Securities held in a Depository the Custodian shall make a claim against
the Depository on behalf of the Fund, except that the Custodian shall not
be under any obligation to appear in, prosecute or defend any action suit
or proceeding in respect to any Securities held by a Depository which in
its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be furnished as often
as may be required, or alternatively, the Fund shall be subrogated to the
rights of the Custodian with respect to such claim against the Depository
should it so request in a Certificate. This paragraph shall not, however,
excuse any failure by the Custodian to act in accordance with a
Certificate, Oral Instructions, or Written Instructions given in
accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution
by the Transfer Agent of the Fund of any amount paid by the Custodian to
the Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount if the Securities upon which
such amount is payable are in default, or if payment is refused after the
Custodian has timely and properly, in accordance with this Agreement, made
due demand or presentation, unless and until (i) it shall be directed to
take such action by a Certificate and (ii) it shall be assured to its
satisfaction of reimbursement of its costs and expenses in connection with
any such action, but the Custodian shall have such a duty if the Secu-
rities were not in default on the payable date and the Custodian failed
to timely and properly make such demand for payment and such failure is
the reason for the non-receipt of payment.
7. The Custodian may, with the prior approval of the Board of
Trustees of the Fund, appoint one or more banking institutions as
subcustodian or subcustodians, or as co-Custodian or co-Custodians, of
Securities and moneys at any time owned by the Fund, upon such terms and
conditions as may be approved in a Certificate or contained in an
agreement executed by the Custodian, the Fund and the appointed
institution; provided, however, that appointment of any foreign banking
institution or depository shall be subject to the provisions of Article
XV hereof.
8. The Custodian agrees to indemnify the Fund against and save the
Fund harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of the
negligence, bad faith or willful misconduct of any subcustodian of the
Securities and moneys owned by the Fund.
9. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it,
for the account of the Fund and specifically allocated to a Series are
such as properly may be held by the Fund or such Series under the
provisions of its then current prospectus, or (b) to ascertain whether any
transactions by the Fund, whether or not involving the Custodian, are such
transactions as may properly be engaged in by the Fund.
10. The Custodian shall be entitled to receive and the Fund agrees
to pay to the Custodian all reasonable out-of-pocket expenses and such
compensation as may be agreed upon in writing from time to time between
the Custodian and the Fund. The Custodian may charge such compensation,
and any such expenses with respect to a Series incurred by the Custodian
in the performance of its duties under this Agreement against any money
specifically allocated to such Series. The Custodian shall also be
entitled to charge against any money held by it for the account of a
Series the amount of any loss, damage, liability or expense, including
counsel fees, for which it shall be entitled to reimbursement under the
provisions of this Agreement attributable to, or arising out of, its
serving as Custodian for such Series. The expenses for which the
Custodian shall be entitled to reimbursement hereunder shall include, but
are not limited to, the expenses of subcustodians and foreign branches of
the Custodian incurred in settling outside of New York City transactions
involving the purchase and sale of Securities of the Fund. Notwithstanding
the foregoing or anything else contained in this Agreement to the
contrary, the Custodian shall, prior to effecting any charge for
compensation, expenses, or any overdraft or indebtedness or interest
thereon, submit an invoice therefor to the Fund.
11. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing, Oral Instructions, or Written
Instructions received by the Custodian and reasonably believed by the
Custodian to be genuine. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming Oral Instructions or Written
Instructions in such manner so that such Certificate or facsimile thereof
is received by the Custodian, whether by hand delivery, telecopier or
other similar device, or otherwise, by the close of business of the same
day that such Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions thereby
authorized by the Fund. The Fund agrees that the Custodian shall incur
no liability to the Fund in acting upon Oral Instructions or Written
Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from
an Authorized Person.
12. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed
by the Custodian to be given in accordance with the terms and conditions
of any Margin Account Agreement. Without limiting the generality of the
foregoing, the Custodian shall be under no duty to inquire into, and shall
not be liable for, the accuracy of any statements or representations
contained in any such instrument or other notice including, without limi-
tation, any specification of any amount to be paid to a broker, dealer,
futures commission merchant or Clearing Member. This paragraph shall not
excuse any failure by the Custodian to have acted in accordance with any
Margin Agreement it has executed or any Certificate, Oral Instructions,
or Written Instructions given in accordance with this Agreement.
13. The books and records pertaining to the Fund, as described in
Appendix E hereto, which are in the possession of the Custodian shall be
the property of the Fund. Such books and records shall be prepared and
maintained by the Custodian as required by the Investment Company Act of
1940, as amended, and other applicable Securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall
have access to such books and records during the Custodian's normal
business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by the Custodian to the Fund or
the Fund's authorized representative, and the Fund shall reimburse the
Custodian its expenses of providing such copies. Upon reasonable request
of the Fund, the Custodian shall provide in hard copy or on micro-film,
whichever the Custodian elects, any records included in any such delivery
which are maintained by the Custodian on a computer disc, or are similarly
maintained, and the Fund shall reimburse the Custodian for its expenses
of providing such hard copy or micro-film.
14. The Custodian shall provide the Fund with any report obtained
by the Custodian on the system of internal accounting control of the Book-
Entry system, each Depository or O.C.C., and with such reports on its own
systems of internal accounting control as the Fund may reasonably request
from time to time.
15. The Custodian shall furnish upon request annually to the Fund
a letter prepared by the Custodian's accountants with respect to the
Custodian's internal systems and controls in the form generally provided
by the Custodian to other investment companies for which the Custodian
acts as custodian.
16. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands
whatsoever, including attorney's fees, howsoever arising out of, or
related to, the Custodian's performance of its obligations under this
Agreement, except for any such liability, claim, loss and demand arising
out of the negligence, bad faith, or willful misconduct of the Custodian,
any co-Custodian or subcustodian appointed by the Custodian, or that of
the officers, employees, or agents of any of them.
17. Subject to the foregoing provisions of this Agreement, the
Custodian shall deliver and receive Securities, and receipts with respect
to such Securities, and shall make and receive payments only in accordance
with the customs prevailing from time to time among brokers or dealers in
such Securities and, except as may otherwise be provided by this Agreement
or as may be in accordance with such customs, shall make payment for
Securities only against delivery thereof and deliveries of Securities only
against payment therefor.
18. The Custodian will comply with the procedures, guidelines or
restrictions ("Procedures") adopted by the Fund from time to time for par-
ticular types of investments or transactions, e.g., Repurchase Agreements
and Reverse Repurchase Agreements, provided that the Custodian has
received from the Fund a copy of such Procedures. If within ten days
after receipt of any such Procedures, the Custodian determines in good
faith that it is unreasonable for it to comply with any new procedures,
guidelines or restrictions set forth therein, it may within such ten day
period send notice to the Fund that it does not intend to comply with
those new procedures, guidelines or restrictions which it identifies with
particularity in such notice, in which event the Custodian shall not be
required to comply with such identified procedures, guidelines or
restrictions; provided, however, that, anything to the contrary set forth
herein or in any other agreement with the Fund, if the Custodian identi-
fies procedures, guidelines or restrictions with which it does not intend
to comply, the Fund shall be entitled to terminate this Agreement without
cost or penalty to the Fund upon thirty days' written notice.
19. Whenever the Custodian has the authority to deduct monies from
the account for a series without a Certificate, it shall notify the Fund
within one business day of such deduction and the reason for it. Whenever
the Custodian has the authority to sell Securities or any other property
of the Fund on behalf of any Series without a Certificate, the Custodian
will notify the Fund of its intention to do so and afford the Fund the
reasonable opportunity to select which Securities or other property it
wishes to sell on behalf of such Series. If the Fund does not promptly
sell sufficient Securities or Deposited Property on behalf of the Series,
then, after notice, the Custodian may proceed with the intended sale.
20. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth or referred to in this Agreement, and no covenant or obligation
shall be implied in this Agreement against the Custodian.
ARTICLE XVII
TERMINATION
1. Except as provided in paragraph 3 of this Article, this
Agreement shall continue until terminated by either the Custodian giving
to the Fund, or the Fund giving to the Custodian, a notice in writing
specifying the date of such termination, which date shall be not less than
60 days after the date of the giving of such notice. In the event such
notice or a notice pursuant to paragraph 3 of this Article is given by the
Fund, it shall be accompanied by a copy of a resolution of the Board of
Trustees of the Fund, certified by an Officer and the Secretary or an
Assistant Secretary of the Fund, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be
eligible to serve as a custodian for the Securities of a management
investment company under the Investment Company Act of 1940. In the event
such notice is given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a copy of a resolution of the
Board of Trustees of the Fund, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or custodians. In the ab-
sence of such designation by the Fund, the Custodian may designate a
successor custodian which shall be a bank or trust company eligible to
serve as a custodian for Securities of a management investment company
under the Investment Company Act of 1940 and which is acceptable to the
Fund. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice of acceptance
by the successor custodian on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and held by it
as Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon
the date specified in the notice of termination of this Agreement and upon
the delivery by the Custodian of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund be deemed to be its own custodian and the
Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement arising thereafter, other than the duty with
respect to Securities held in the Book Entry System which cannot be deliv-
ered to the Fund to hold such Securities hereunder in accordance with this
Agreement.
3. Notwithstanding the foregoing, the Fund may terminate this
Agreement upon the date specified in a written notice in the event of the
"Bankruptcy" of The Bank of New York. As used in this sub-paragraph, the
term "Bankruptcy" shall mean The Bank of New York's making a general
assignment, arrangement or composition with or for the benefit of its
creditors, or instituting or having instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or the entry of a order for
relief under any applicable bankruptcy law or any other relief under any
bankruptcy or insolvency law or other similar law affecting creditors
rights, or if a petition is presented for the winding up or liquidation
of the party or a resolution is passed for its winding up or liquidation,
or it seeks, or becomes subject to, the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or for all
or substantially all of its assets or its taking any action in furtherance
of, or indicating its consent to approval of, or acquiescence in, any of
the foregoing.
ARTICLE XVIII
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be
obligated to have or utilize the Terminal Link, and the provisions of this
Article shall apply if, but only if, the Fund in its sole and absolute
discretion elects to utilize the Terminal Link to transmit Certificates
to the Custodian.
2. The Terminal Link shall be utilized only for the purpose of the
Fund providing Certificates to the Custodian and the Custodian providing
notices to the Fund and only after the Fund shall have established access
codes and internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes. Each use of the
Terminal Link by the Fund shall constitute a representation and warranty
that at least two officers have each utilized an access code that such
internal safekeeping procedures have been established by the Fund, and
that such use does not contravene the Investment Company Act of 1940 and
the rules and regulations thereunder.
3. Each party shall obtain and maintain at its own cost and expense
all equipment and services, including, but not limited to communications
services, necessary for it to utilize the Terminal Link, and the other
party shall not be responsible for the reliability or availability of any
such equipment or services, except that the Custodian shall not pay any
communications costs of any line leased by the Fund, even if such line is
also used by the Custodian.
4. The Fund acknowledges that any data bases made available as part
of, or through the Terminal Link and any proprietary data, software,
processes, information and documentation (other than any such which are
or become part of the public domain or are legally required to be made
available to the public) (collectively, the "Information"), are the
exclusive and confidential property of the Custodian. The Fund shall, and
shall cause others to which it discloses the Information, to keep the
Information confidential by using the same care and discretion it uses
with respect to its own confidential property and trade secrets, and shall
neither make nor permit any disclosure without the express prior written
consent of the Custodian.
5. Upon termination of this Agreement for any reason, each Fund
shall return to the Custodian any and all copies of the Information which
are in the Fund's possession or under its control, or which the Fund
distributed to third parties. The provisions of this Article shall not
affect the copyright status of any of the Information which may be
copyrighted and shall apply to all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from
time to time without notice to the Fund, except that the Custodian shall
give the Fund notice not less than 75 days in advance of any modification
which would materially adversely affect the Fund's operation, and the Fund
agrees not to modify or attempt to modify the Terminal Link without the
Custodian's prior written consent. The Fund acknowledges that any
software provided by the Custodian as part of the Terminal Link is the
property of the Custodian and, accordingly, the Fund agrees that any
modifications to the same, whether by the Fund or the Custodian and
whether with or without the Custodian's consent, shall become the property
of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it
utilizes or the Fund utilizes in connection with the Terminal Link makes
any warranties or representations, express or implied, in fact or in law,
including but not limited to warranties of merchantability and fitness for
a particular purpose.
8. Each party will cause its officers and employees to treat the
authorization codes and the access codes applicable to Terminal Link with
extreme care, and irrevocably authorizes the other to act in accordance
with and rely on Certificates and notices received by it through the
Terminal Link. Each party acknowledges that it is its responsibility to
assure that only its authorized persons use the Terminal Link on its
behalf, and that a party shall not be responsible nor liable for use of
the Terminal Link on behalf of the other party by unauthorized persons of
such other party.
9. Notwithstanding anything else in this Agreement to the contrary,
neither party shall have any liability to the other for any losses,
damages, injuries, claims, costs or expenses arising as a result of a
delay, omission or error in the transmission of a Certificate or notice
by use of the Terminal Link except for money damages for those suffered
as the result of the negligence, bad faith or willful misconduct of such
party or its officers, employees or agents in an amount not exceeding for
any incident $100,000; provided, however, that a party shall have no
liability under this Section 9 if the other party fails to comply with the
provisions of Section 11.
10. Without limiting the generality of the foregoing, in no event
shall either party or any manufacturer or supplier of its computer
equipment, software or services relating to the Terminal Link be
responsible for any special, indirect, incidental or consequential damages
which the other party may incur or experience by reason of its use of the
Terminal Link even if such party, manufacturer or supplier has been
advised of the possibility of such damages, nor with respect to the use
of the Terminal Link shall either party or any such manufacturer or
supplier be liable for acts of God, or with respect to the following to
the extent beyond such person's reasonable control: machine or computer
breakdown or malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, the Terminal Link as
promptly as practicable, and in any event within 24 hours after the
earliest of (i) discovery thereof, and (ii) in the case of any error, the
date of actual receipt of the earliest notice which reflects such error,
it being agreed that discovery and receipt of notice may only occur on a
business day. The Custodian shall promptly advise the Fund whenever the
Custodian learns of any errors, omissions or interruption in, or delay or
unavailability of, the Terminal Link.
12. Each party shall, as soon as practicable after its receipt of
a Certificate or a notice transmitted by the Terminal Link, verify to the
other party by use of the Terminal Link its receipt of such Certificate
or notice, and in the absence of such verification the party to which the
Certificate or notice is sent shall not be liable for any failure to act
in accordance with such Certificate or notice and the sending party may
not claim that such Certificate or notice was received by the other party.
ARTICLE XIX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names
and the signatures of the present Authorized Persons. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event
that any such present Authorized Person ceases to be an Authorized Person
or in the event that other or additional Authorized Persons are elected
or appointed. Until such new Certificate shall be received, the Custodian
shall be entitled to rely and to act upon Oral Instructions, Written
Instructions, or signatures of the present Authorized Persons as set forth
in the last delivered Certificate to the extent provided by this
Agreement.
2. Annexed hereto as Appendix B is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names
and the signatures of the present Officers of the Fund. The Fund agrees
to furnish to the Custodian a new Certificate in similar form in the event
any such present officer ceases to be an officer of the Fund, or in the
event that other or additional officers are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be entitled
to rely and to act upon the signatures of the officers as set forth in the
last delivered Certificate to the extent provided by this Agreement.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, other than any
Certificate or Written Instructions, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices
at 90 Washington Street, New York, New York 10286, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or rehired
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its office at the
address for the Fund first above written, or at such other place as the
Fund may from time to time designate in writing.
5. This Agreement constitutes the entire agreement between the
parties, replaces all prior agreements and may not be amended or modified
in any manner except by a written agreement executed by both parties with
the same formality as this Agreement and approved by a resolution of the
Board of Trustees of the Fund, except that Appendices A and B may be
amended unilaterally by the Fund without such an approving resolution.
6. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without
the written consent of the Custodian, or by the Custodian or The Bank of
New York without the written consent of the Fund, authorized or approved
by a resolution of the Fund's Board of Trustees. For purposes of this
paragraph, no merger, consolidation, or amalgamation of the Custodian, The
Bank of New York, or the Fund shall be deemed to constitute an assignment
of this Agreement.
7. This Agreement shall be construed in accordance with the laws
of the State of New York without giving effect to conflict of laws
principles thereof. Each party hereby consents to the jurisdiction of a
state or federal court situated in New York City, New York in connection
with any dispute arising hereunder and hereby waives its right to trial
by jury.
8. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
9. A copy of the Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Board of Trustees
of the Fund as Trustees and not individually and that the obligations of
the instrument are not binding upon any of the Trustees or shareholders
individually but are binding upon the assets and property of the Fund;
provided, however, that the Declaration of Trust of the Fund provides that
the assets of a particular series of the Fund shall under no circumstances
be charges with liabilities attributable to any other series of the Fund
and that all persons extending credit to, or contracting with or having
any claim against a particular series of the Fund shall look only to the
assets of that particular series for payment of such credit, contract or
claim.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective Officers, thereunto duly authorized and
their respective seals to be hereunto affixed, as of the day and year
first above written.
OPPENHEIMER MULTI-SECTOR INCOME TRUST
By: _______________________________
Robert G. Galli, Secretary
[SEAL]
Attest:
___________________________________
Robert G. Zack, Assistant Secretary
THE BANK OF NEW YORK
[SEAL] By__________________________________
Attest:
___________________________________
<PAGE>
APPENDIX A
I, President and I,
, of Oppenheimer Fund,
a Massachusetts business trust (the "Fund") do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of Trust
and By-Laws to give Oral Instructions and Written Instructions on behalf
of the Fund, except that those persons designated as being an "Officer of
OSS" shall be an Authorized Person only for purposes of Articles XII and
XIII. The signatures set forth opposite their respective names are their
true and correct signatures:
Name Position Signature
__________________ _______________________ __________________
<PAGE>
APPENDIX B
I, President and I,
, of Oppenheimer Fund, a
Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals for whom a position other than "Officer of
OSS" is specified serve in the following positions with the Fund and each
has been duly elected or appointed by the Board of Trustees of the Fund
to each such position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws. With respect to the following
individuals for whom a position of "Officer of OSS" is specified, each
such individual has been designated by a resolution of the Board of
Trustees of the Fund to be an Officer for purposes of the Fund's Custody
Agreement with The Bank of New York, but only for purposes of Articles XII
and XIII thereof and a certified copy of such resolution is attached
hereto. The signatures of each individual below set forth opposite their
respective names are their true and correct signatures:
Name Position Signature
__________________ _______________________ __________________
<PAGE>
APPENDIX C
The undersigned, hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund (the "Fund"),
further certifies that the following resolutions were adopted by the Board
of Trustees of the Fund at a meeting duly held on __________________, 199
, at which a quorum at all times present and that such resolutions have
not been modified or rescinded and are in full force an effect as of the
date hereof.
RESOLVED, that The Bank New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the
Fund dated as of 199 (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
to act in accordance with, and to rely on instructions by
the Fund to the Custodian communicated by a Terminal Link as
defined in the Custody Agreement.
RESOLVED, that the Fund shall establish access codes and
grant use of such access codes only to officers of the Fund
as defined in the Custody Agreement, and shall establish
internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes.
RESOLVED, that Officers of the Fund as defined in the
Custody Agreement shall, following the establishment of such
access codes and such internal safekeeping procedures,
advise the Custodian that the same have been established by
delivering a Certificate, as defined in the Custody
Agreement, and the Custodian shall be entitled to rely upon
such advice.
IN WITNESS WHEREOF, I hereunto set my hand in the seal of
, as of the day of , 199 .
APPENDIX D
I, Richard P. Lando, an Assistant Vice President with THE BANK OF NEW
YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal<PAGE>
APPENDIX E
The following books and records pertaining to Fund shall be prepared
and maintained by the Custodian and shall be the property of the Fund:
EXHIBIT A
CERTIFICATION
The undersigned, , hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust
(the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on 199
, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the
date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis to deposit in the Book-Entry System, as defined in the
Custody Agreement, all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System
to the extent possible in connection with its performance
thereunder, including, without limitation, In connection
with settlements of purchases and sales of Securities, loans
of Securities, and deliveries and returns of Securities col-
lateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day of
, 199 .
__________________________
[SEAL]<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned , hereby certifies
that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary to deposit
in The Depository Trust Company ("DTC") as a "Depository" as
defined in the Custody Agreement, all Securities eligible
for deposit therein, regardless of the Series to which the
same are specifically allocated, and to utilize DTC to the
extent possible in connection with its performance there-
under, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
as of the day of , 199 .
___________________________
[SEAL]<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, hereby certifies that he or she
is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of 199 , (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
until such time as it receives a Certificate, as defined in
the Custody Agreement, to the contrary to deposit in the
Participants Trust Company as a Depository, as defined in
the Custody Agreement, all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Participants
Trust Company to the extent possible in connection with its
performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns
of Securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
, as of the day of , 199 .
_______________________
[SEAL]
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, , hereby certifies that
he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and that
such resolution has not been modified or rescinded and is in full force
and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary, to ac-
cept, utilize and act with respect to Clearing Member
confirmations for Options and transaction in Options,
regardless of the Series to which the same are specifically
allocated, as such terms are defined in the Custody
Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of , as of the day of , 199 .
____________________________
[SEAL]<PAGE>
EXHIBIT D
[FORM OF FOREIGN SUBCUSTODIAN AGREEMENT]<PAGE>
Appendix A
Article XIX.1 49
Appendix B
Article XIX.2 50
Exhibit A
Article III. 17
Exhibit B
Article III. 18
Exhibit C
Article III. 18
Exhibit D34
Article XV.4 34
Schedule A
Article XV.1 33
CUSTODY\680
ACCOUNTING SERVICES AGREEMENT
AGREEMENT made this 12th day of April, 1990 between OPPENHEIMER
MULTI-SECTOR INCOME TRUST (the "Fund") having its principal place of
business at Two World Trade Center, New York, New York 10048-0203, and
OPPENHEIMER MANAGEMENT CORPORATION ("OMC"), having its principal place of
business at Two World Trade Center, New York, New York 10048-0203.
WITNESSETH:
WHEREAS, pursuant to a Custodian Agreement dated November 30, 1988,
as amended, between the Fund and State Street Bank and Trust Company
("State Street"), State Street furnished certain services to the Fund,
including accounting services and the calculation of the Fund's net asset
value;
WHEREAS, the said Custodian Agreement between the Fund and State
Street has terminated effective this date;
WHEREAS, the Fund now desires that OMC perform such accounting
services and calculate the Fund's net asset value;
WHEREAS, OMC is willing to perform such services on the terms and
conditions set forth in this Agreement, including a fee which is the same
as that received by State Street for providing accounting services;
NOW, THEREFORE, in consideration of the mutual premises and covenants
hereinafter contained, the parties agree as follows:
1. Employment. The Fund hereby employs OMC to maintain the books and
records of the Fund required to be maintained pursuant to Rule 31a-1 (the
"Rule") under the Investment Company Act of 1940 (the "Act"), including,
without limitation:
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and
disbursements of cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, including
interest accrued and interest received, as required by
subsection (b)(2)(i) of the Rule;
(c) Separate ledger accounts required by subsections (b)(2)(ii) and
(iii) of the Rule; and
(d) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the
Rule.
2. Daily Services. In addition to the maintenance of the books and
records specified above, OMC shall perform the following accounting
services for the Fund daily (unless otherwise noted below):
(a) Calculate the net asset value per share once each week, on the
last day of such week that The New York Stock Exchange is open
for business, and also at the end of each month, using
securities valuation methods determined from time to time by the
Fund's board of Trustees, or valuations provided by a pricing
service approved by the Board;
(b) Calculate the dividend and capital gain distributions, if any;
(c) Calculate the Fund's dividend yield, based upon the
distributions paid over the prior 30-day or monthly period,
using the offering price on the last day of the period;
(d) Reconcile cash movements with the Fund's Custodian Bank;
(e) Affirm to the Fund's Custodian Bank portfolio trades and cash
settlements;
(f) Verify and reconcile with the Fund's Custodian all daily trade
activity;
(g) Produce the following reports:
(i) a current security position report;
(ii) a summary report of transactions and pending
maturities (including the principal, cost, and
accrued interest on each portfolio security in
maturity date order); and
(iii) a current cash position report (including cash
available from portfolio sales less cash needed for
settlement of portfolio purchases); and
(h) Calculate the daily expense accrual.
3. Semi-Annual Services. Semi-annually, OMC shall prepare drafts of
financial statements to shareholders.
4. Fees. The above services will be provided at an annual fee of $24,000
payable to OMC by the Fund, plus out-of-pocket costs and expenses
reasonably incurred. Such fee shall be payable monthly (with proration
for any month during which services are provided for less than a full
month).
5. Information from the Fund. The Fund shall, in written form
satisfactory to OMC, daily (i) inform OMC of all purchases and sales of
portfolio securities and all payments of expenses; (ii) arrange to have
its Custodian Bank inform OMC of all receipts and disbursements of cash,
cash on hand, and securities positions; (iii) arrange to have its transfer
agent inform OMC of total shares outstanding, and (iv) cause the pricing
service, if any, designated by the Board to provide OMC the daily
valuations of all securities held by the Fund as of the time agreed to by
the Fund and such pricing service; and the Fund shall provide or cause to
be provided all such information to OMC in a timely fashion to enable OMC
to calculate the Fund's net asset value in the manner contemplated by the
Fund's prospectus and the procedures described herein. Upon the
commencement of services hereunder, the Fund shall provide OMC a list of
all of its currently-held portfolio securities and other assets.
6. Evidence of Authority. OMC shall be protected, in carrying out its
duties under this Agreement, in acting upon any written instruction,
notice, consent, certificate or other instrument believed by it to be
genuine and to have been properly executed by or on behalf of the Fund by
an officer or employee of the Fund named in a resolution of the Fund's
Board of Trustees. Such instructions may be transmitted to OMC by mail
or by hand delivery or by telecopier or other facsimile or electromagnetic
device, and OMC may rely on such facsimile or electromagnetic copy as an
original. The Fund shall furnish to OMC and OMC may receive and accept
a certified copy of such resolution as conclusive evidence of the
authority of any person to act in accordance with such resolution, and
such resolution may be considered as in full force and effect until
receipt by OMC of written notice to the contrary. Such resolution may be
general or specific in its terms.
7. Records. OMC shall create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will
meet the obligations of the Fund under the Act, with particular attention
to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable
federal and state tax laws and any other laws or administrative rules or
procedures which may be applicable to the Fund. All such records shall
be the property of the Fund and shall at all times during the regular
business hours of OMC be open for inspection by duly authorized officers,
employees or agents of the Fund, and employees and agents of the
Securities and Exchange Commission.
8. Reports to the Fund by Independent Public Accountants. OMC shall
provide the Fund, at such times as the Fund may reasonably require, with
reports by independent public accountants concerning OMC's accounting
system and internal accounting controls. Such reports shall be of
sufficient scope and in sufficient detail, as may reasonably be required
by the Fund, to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no
such inadequacies, shall so state.
9. Standard of Care. OMC shall exercise reasonable care in carrying out
the provisions of this Agreement, but shall be kept indemnified by and
shall be without liability to the Fund for any action taken or omitted
by OMC in the absence of bad faith, gross negligence or willful
misconduct. It shall be entitled to receive and act upon advice of
counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or not taken pursuant
to such advice. OMC shall have no obligation to verify independently any
securities valuations provided to it hereunder by any pricing service
designated by the Fund's Board of Trustees, and the Fund agrees to
indemnify and hold harmless OMC from and against any loss or liability
arising from OMC's reliance on information provided by such pricing
service, the Fund's Custodian Bank, or the Fund's transfer agent unless
OMC has acted with gross negligence or bad faith. OMC shall have no
obligation to verify the beginning account balances as of the date OMC
commences to provide accounting services hereunder, and the Fund agrees
to indemnify and hold harmless OMC from and against any loss or liability
arising from OMC's reliance on such information provided by State Street.
10. Effective Period, Termination and Amendment. This Agreement takes
effect on April 12, 1990, and shall continue in full force and effect
until terminated as hereinafter provided, may be amended at any time by
agreement of the parties hereto, and may be terminated by the Fund or OMC
by an instrument in writing delivered by hand or mailed, postage prepaid
to the Fund or OMC, such termination to take effect not sooner than thirty
days after the date of such hand delivery or mailing. Unless earlier
terminated as set forth above, this Agreement shall terminate
automatically on the termination of OMC's Investment Advisory Agreement
with the Fund. Upon termination of this Agreement, the Fund shall pay to
OMC such compensation as may be due as of the date of such termination and
shall likewise reimburse OMC for its costs, expenses and disbursements
incurred to such date.
11. Notices. Unless otherwise provided hereunder, any notice provided
hereunder shall be sufficiently given when sent by registered or certified
mail to the party or parties required to be served with such notice, at
the address of such party set forth above or at such other address as such
party may from time to time specify in writing to the other party pursuant
to this paragraph.
12. Heading. Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this
Agreement.
13. Assignment. This Agreement and the rights and duties hereunder shall
not be assignable by any party hereto except upon the specific written
consent of the other party.
14. Governing Law. This Agreement shall be governed by and its provisions
shall be construed in accordance with the laws of the State of New York
as to contracts to be performed wholly in such state, without reference
to conflicts and choice of law principles.
15. Limitation of Liability of the Trustees and Shareholders. A copy of
the Declaration of Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given by the Fund to
OMC that this instrument is executed on behalf of the Trustees of the Fund
as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the Fund
or a particular Series.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed all as of the day and year first above
written.
OPPENHEIMER MULTI-SECTOR INCOME TRUST
By: /s/ Robert G. Zack
----------------------
Robert G. Zack
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Robert G. Galli
----------------------
Robert G. Galli
LEGAG\680.ACC
OPPENHEIMER ASSET ALLOCATION FUND
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
OPPENHEIMER DISCOVERY FUND
OPPENHEIMER GLOBAL BIO-TECH FUND
OPPENHEIMER GLOBAL ENVIRONMENT FUND
OPPENHEIMER GLOBAL FUND
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
OPPENHEIMER MONEY MARKET FUND, INC.
OPPENHEIMER MORTGAGE INCOME FUND
OPPENHEIMER MULTI-GOVERNMENT TRUST
OPPENHEIMER MULTI-SECTOR INCOME TRUST
OPPENHEIMER NEW YORK TAX-EXEMPT FUND
OPPENHEIMER FUND
OPPENHEIMER PENNSYLVANIA TAX-EXEMPT FUND
OPPENHEIMER SPECIAL FUND
OPPENHEIMER TARGET FUND
OPPENHEIMER TAX-FREE BOND FUND
OPPENHEIMER TIME FUND
OPPENHEIMER U.S. GOVERNMENT TRUST
CERTIFIED RESOLUTIONS OF THE BOARDS
June 10, 1993
At a meeting of the Boards for the above referenced funds (the "Funds")
held on June 10, 1993, the members thereof by unanimous vote of those
present adopted and approved the following resolutions:
"RESOLVED, that Robert G. Galli, Andrew J. Donohue or Robert G.
Zack, and each of them, be, and the same hereby is appointed the attorney-
in-fact and agent of Donald W. Spiro, as President of the Funds, Robert
G. Galli, as Secretary of the Funds, and George C. Bowen, as Treasurer of
the Funds (Principal Financial and Accounting Officer), with full power
of substitution and resubstitution, to sign on the behalf of such officers
of each of the Funds any and all Registration Statements (including any
post-effective amendments to such Registration Statements) under the
Securities Act of 1933 and the Investment Company Act of 1940 and any
amendments and supplements thereto, and other documents in connection
thereunder, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission; and be it further
RESOLVED, that Robert G. Galli, Andrew J. Donohue or Robert G.
Zack, and each of them, hereby is authorized, empowered and directed, in
the name and on behalf of the Funds, to take such additional action and
to execute and deliver such additional documents and instruments as any
of them may deem necessary or appropriate to implement the provisions of
the foregoing resolution, the authority for the taking of such action and
the execution and delivery of such documents and instruments of such
documents and instruments to be conclusively evidenced thereby."
In witness whereof, the undersigned has hereunto set his hand this 26th
day of July, 1993.
/s/ Robert G. Zack
Robert G. Zack
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacity as the Treasurer (Principal Financial and Accounting
Officer) of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts
business trust (the "Fund"), to sign on his (her) behalf any and all
Registration Statements (including any post-effective amendments to
Registration Statements) under the Securities Act of 1933, the Investment
Company Act of 1940 and any amendments and supplements thereto, and other
documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and
about the premises, as fully as to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, may lawfully do or cause
to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ George C. Bowen
George C. Bowen
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Sidney M. Robbins
Sidney M. Robbins
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Russell S. Reynolds, Jr.
Russell S. Reynolds, Jr.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Edward V. Regan
Edward V. Regan
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Kenneth A. Randall
Kenneth A. Randall
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Elizabeth B. Moynihan
Elizabeth B. Moynihan
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Leon Levy
Leon Levy
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Pauline Trigere
Pauline Trigere
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Leo Cherne
Leo Cherne
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Donald W. Spiro
Donald W. Spiro
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 15th day of February, 1995.
/s/ Clayton Yeutter
Clayton Yeutter
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST,
a Massachusetts business trust (the "Fund"), to sign on his (her) behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933,
the Investment Company Act of 1940 and any amendments and supplements
thereto, and other documents in connection thereunder, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/s/ Benjamin Lipstein
Benjamin Lipstein
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his or her
true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or her
capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 19th day of August, 1993.
/s/ Robert G. Galli
Robert G. Galli
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<NAME> OPPENHEIMER MULTI-SECTOR INCOME TRUST
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1993
<PERIOD-END> OCT-31-1994
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<APPREC-INCREASE-CURRENT> (15068472)
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<DISTRIBUTIONS-OF-INCOME> 24512388
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<SHARES-REINVESTED> 168788
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<GROSS-EXPENSE> 3115564
<AVERAGE-NET-ASSETS> 306686000
<PER-SHARE-NAV-BEGIN> 10.96
<PER-SHARE-NII> 1.00
<PER-SHARE-GAIN-APPREC> (.82)
<PER-SHARE-DIVIDEND> .84
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